Question

    GDP= 12000, tax rate was 15% of GDP, Private savings was

    12% of GDP and public savings was 360. Find consumption level of closed economy.
    A 8400 Correct Answer Incorrect Answer
    B 4800 Correct Answer Incorrect Answer
    C 8800 Correct Answer Incorrect Answer
    D 8700 Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    C = Y – T – S T = 15/100 (12000) = 1800 Sp = 12/100(12000) = 1440 Sgovt = 360 S = Sp + Sgovt = 1440 + 360 = 1800 C= 12000 – 1800 – 1800 = 8400

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