Question 7 Use the market for saving and investment to show the effect of the following: Firms are forced to close down due to the coronavirus outbreak. Real interest rate (percent per year) 10 8 6 2 0 The savings function [Select] The investment function [Select] The real interest rate [Select] 1.2 SLF The level of savings and investment [Select] DLF 1.4 1.6 1.8 2.0 2.2 Loanable funds (trillions of 2009 dollars)

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Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.