In a closed economy, national saving equals
A)C + I + G.
B)Y - C - G.
C)Y - C - I.
D)Y - G - I.

Question

Quizplus · Accepted Answer

In a closed economy (without international trade), national saving (S) equals the difference between national income (Y) and total spending by households and government (C + G). Therefore, S = Y - C - G. Investment (I) is not included in national saving because it represents a use of current resources for future benefits, rather than a current saving of resources.

In a Closed Economy, National Saving Equals