Question
If GDP = $1,000, consumption = $600, taxes = $100, and government purchases = $200, how much is saving and investment?
a. saving = $200, investment = $100
b. saving = $0, investment = $0
c. saving = $300, investment = $300
d. saving = $200, investment = $200
e. saving = $100, investment = $200
a. saving = $200, investment = $100
b. saving = $0, investment = $0
c. saving = $300, investment = $300
d. saving = $200, investment = $200
e. saving = $100, investment = $200
Answers
GPT-4o mini
To determine how much is saving and investment based on the provided figures, let's analyze the situation step-by-step given the GDP identities.
1. **Identify Key Variables**:
- GDP (Y) = $1,000
- Consumption (C) = $600
- Taxes (T) = $100
- Government Purchases (G) = $200
2. **Calculate Total Income**:
GDP represents the total income in the economy, which is $1,000.
3. **Calculate Savings**:
We know that savings (S) in a simple economy without foreign trade can be expressed as:
\[
S = Y - C - T
\]
Plugging in the values:
\[
S = 1000 - 600 - 100 = 300
\]
4. **Calculate Investment**:
In a closed economy (no foreign trade), savings must equal investment (I):
\[
S = I
\]
Therefore, investment is also $300.
5. **Final Values**:
- Saving = $300
- Investment = $300
So the correct answer is **c. saving = $300, investment = $300**.
1. **Identify Key Variables**:
- GDP (Y) = $1,000
- Consumption (C) = $600
- Taxes (T) = $100
- Government Purchases (G) = $200
2. **Calculate Total Income**:
GDP represents the total income in the economy, which is $1,000.
3. **Calculate Savings**:
We know that savings (S) in a simple economy without foreign trade can be expressed as:
\[
S = Y - C - T
\]
Plugging in the values:
\[
S = 1000 - 600 - 100 = 300
\]
4. **Calculate Investment**:
In a closed economy (no foreign trade), savings must equal investment (I):
\[
S = I
\]
Therefore, investment is also $300.
5. **Final Values**:
- Saving = $300
- Investment = $300
So the correct answer is **c. saving = $300, investment = $300**.