suppose investment is $30 billion, exports are $20 billion, imports are $50 billion, government spending is $80 billion, and taxes are $60 billion. How much money is the household sector saving?

Question

A. -10 billion
B. 80 billion
C. 60 billion
D. 10 billion
E. 20 billion

Answer 1

The household sector saving can be calculated by subtracting taxes from income and subtracting consumption from income.

Income = Exports + Investment + Government spending = $20 billion + $30 billion + $80 billion = $130 billion

Consumption = Government spending + Imports = $80 billion + $50 billion = $130 billion

Household saving = Income - Consumption - Taxes = $130 billion - $130 billion - $60 billion = $-60 billion

Therefore, the correct answer is A. -10 billion. The household sector is actually borrowing $10 billion in this scenario.