Suppose That in a Closed Economy GDP Is Equal to 11,000

question 107

Multiple Choice

Suppose that in a closed economy GDP is equal to 11,000, taxes are equal to 2,500 consumption equals 7,500 and government purchases equal 2,000. What are private saving, public saving, and national saving?

• A)1,500, 1,000, and 500, respectively
• B)1,000, 500, and 1,500, respectively
• C)500, 1,500, and 1,000, respectively
• D)None of the above is correct.

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Definitions:

Par Value

A nominal value assigned to a security or stock, often used to calculate dividends or interest.

Interest

The cost of borrowing money or the compensation paid for the use of money, usually expressed as an annual percentage rate.

Premium

The amount paid for an insurance policy, or the amount by which a bond or stock sells above its par value.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, which may differ from its market value.