The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Cedarland is $5 billion. For Cedarland,

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Dozer

19 December, 07:29

The country of Cedarland does not trade with any other country. Its GDP is $17 billion. Its government purchases $5 billion worth of goods and services each year and collects $6 billion in taxes. Private saving in Cedarland is $5 billion. For Cedarland,

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Kaydence Pineda · Answer 1

Consumption expenditure in Cedarland is $6 billion.

Investment in Cedarland is $6 billion.

Explanation:

The GDP is $17 billion.

The government purchases are equal to $5 billion.

The tax revenue to the government is $6 billion.

Private saving is equal to $5 billion.

The government saving is equal to

= Tax revenue - Government spending

= $6 billion - $5 billion

= $1 billion

The national saving is equal to

= Private saving + Government saving

= $5 billion + $1 billion

= $6 billion

In a closed economy, investment expenditure is equal to national savings.

So investment in Cedarland is $6 billion.

In a closed economy the GDP is C + I + G

$17 billion = C + I + G

$17 billion = C + $6 billion + $5 billion

C = $17 billion - $11 billion

C = $6 billion

Consumption expenditure in Cedarland is $6 billion.