Asked by Tessa Eddington on May 27, 2024

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To state that national saving is equal to investment, for a closed economy, is to state an accounting identity.

National Saving

The total amount of saving in a country, which includes both private savings and public (government) savings.

Closed Economy

An economic system that does not engage in international trade with outside countries, relying on its own resources.

Accounting Identity

A fundamental equation that must always hold true, often without regard to time or specific instances, in accounting and economics.

  • Interpret the concept of national saving and its equivalence to investment in a closed economy.
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MA
Mohammed AlsayeghMay 28, 2024
Final Answer :
True
Explanation :
In a closed economy, national saving is indeed equal to investment by definition, as the total income in the economy that is not consumed or spent by the government (national saving) must be used for investment. This relationship is an accounting identity, reflecting the fact that all the money saved is ultimately invested within the economy.