Use the equations for public and private saving to demonstrate how total saving in the economy equals investment
What will be an ideal response?
Private saving is equal to Y + TR - C - T, and public saving is equal to T - G - TR. Adding private saving and public saving together yields (Y + TR - C - T) + (T - G - TR) = Y - C - G. In a closed economy (with no net exports), Y= C + I + G, so Y - C - G = I, and the sum of public and private saving is equal to investment.
Economics
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