Which of the following restrictions implies that saving and investment are equal for a closed economy?
A)Private saving is equal to zero.
B)Public saving is equal to zero.
C)The economy's government is running neither a surplus nor a deficit.
D)No restriction is necessary;saving and investment are equal for all closed economies.

Question

Quizplus · Accepted Answer

In a closed economy, by definition, saving must equal investment because there are no external trade or financial flows. This is derived from the national income accounting identity where total output (GDP) is equal to total spending, and thus saving (output not consumed) must equal investment.

Which of the Following Restrictions Implies That Saving and Investment