Use the Following to Answer Questions

question 361

Multiple Choice

Use the following to answer questions:
Scenario: Closed Economy S = I
GDP is $12 trillion this year in a closed economy. Consumption is $8 trillion and government spending is $2 trillion. Taxes are $0.5 trillion.
-(Scenario: Closed Economy S = I) Look at the scenario Closed Economy S = I. How much is private saving?

• A)$4 trillion
• B)$2.5 trillion
• C)$3.5 trillion
• D)-$0.5 trillion

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Definitions:

Expense Account(s)

Accounts used to record expenses in the general ledger, which represent the costs of operating a business that are not directly tied to the production of goods or services.

Income Summary

An account used in the closing process, summarizing all revenues and expenses for a period, to transfer the net result to capital accounts.

Capital Account

A capital account is an account on a company's balance sheet that represents the equity investment of owners and shareholders.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent equity account.