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11 September, 21:20

In a small, closed economy, national income (GDP) is $ 600.00 million for the current quarter. Individuals have spent $ 250.00 million on the consumption of goods and services. They have paid a total of $ 100.00 million in taxes, and the government has spent $ 200.00 million on goods and services this quarter. Use this information and the national income identity to answer the questions. How much is spent on investment in this economy

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  1. 12 September, 00:44
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    The answer is $150 million

    Explanation:

    A closed economy is also called autarky. A closed economy is an economy that trades only within its economy. There is no import and there is no export also. The economy (country) is self-sufficient.

    The formula for GDP in a closed economy equals C + I + G

    where C is the household/individual consumption.

    I is the business or firm's investment

    G is the government spending.

    GDP is $600million

    C is $ 250 million

    G is $ 200 million

    I = ($600 - $ 250 - $200) million

    I = $150 million
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