1.) DEFINE SAVING AND INVESTMENT. Data for the simple closed economy of Newt show that in 1996 saving exceeded investment and the government is running a balanced budget. What is likely to happen? What would happen if the government were instead running a deficit and saving was equal to investment?
(Hint: think in terms of leakages and injections; also, remember that S + T = I + G).
(Hint: think in terms of leakages and injections; also, remember that S + T = I + G).