Private saving
Private saving = Y - T - C
When the question gives income, taxes and consumption. If it gives a deficit or surplus instead of taxes, get T out of that first.
- Y
- National income or GDP for the period
- T
- Tax revenue collected by the government
- C
- Household consumption spending
Public saving, surplus and deficit
Public saving = T - G
Budget surplus = T - G
Budget deficit = G - T = -(public saving)
Whenever the question mentions a surplus or a deficit. Convert it to public saving with the correct sign before using it anywhere else.
- T
- Tax revenue
- G
- Government purchases of goods and services
National saving
National saving = private + public
= (Y - T - C) + (T - G)
= Y - C - G
The short form Y − C − G is fastest, and it never needs taxes. Use the long form as the cross-check.
- Y
- National income or GDP
- C
- Household consumption
- G
- Government purchases
National income accounting identity
Y = C + I + G + NX
Closed economy: Y = C + I + G, so I = Y - C - G
Open economy: I = Y - C - G - NX
Read the question for the word closed. If the economy is open or NX is given, the closed-economy shortcut is wrong.
- I
- Investment, that is, spending on new capital
- NX
- Net exports: exports minus imports, negative for a trade deficit