Question

Please use the labels to correctly order all aspects of the National Saving and Investment Identity.

_____+ ( ______ - ________ ) = _________ + ( government spending − ________ )

Answer 1

Answer:

Private Savings + (Imports – Exports) = Investment + (Government Spending – Tax)

Explanation:

This relationship expressed in the equation above is a macro economy equation which is correct and implies that the quantity supplied of financial capital is equal to the quantity demanded of financial capital.

Supply of financial capital is represented by "Private Savings + (Imports – Exports)", while the demand for financial capital is represented by "Investment + (Government Spending – Tax)".

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