Question:
You are given the following macroeconomic data for a hypothetical economy. Savings (S) = Rs. 500 billion, Budget deficit (BD) = Rs. 100 billion, Net exports (NX) = Rs. 50 billion. According to this information, what must be the level of investment (I) for this economy?
(1) Rs. 650 billion
(2) Rs. 550 billion
(3) Rs. 450 billion
(4) Rs. 400 billion
(5) Rs. 350 billion
Correct Answer:
(3)
Answer Explanation:
In macroeconomic equilibrium, National Savings (S) equals Investment (I) plus Net Exports (NX). Rearranging the formula: Investment (I) = Savings (S) – Net Exports (NX). Therefore, I = 500 – 50 = Rs. 450 billion.
Topic: National Income Year: 2023
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