Look again at the Solved Problem, in which we derived the saving and investment equation S =1+ NX In deriving this equation, we assumed that national income was equal to Y But Yonly includes income...

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Extracted text: Look again at the Solved Problem, in which we derived the saving and investment equation S =1+ NX In deriving this equation, we assumed that national income was equal to Y But Yonly includes income earned by households In the modern US economy, households receive substantial transfers-such as Social Security payments and unemployment insurance payments--from the government Suppose that we define national income to be equal to Y+ TR, where TR equals government transfer payments, and we also define government spending to be equal to G TR Which of the folowing shows that after making these adjustments, we end up with the same saving and investment equation? OA New public saving, Stc=T- (G. TR), and new investment, /. TR, have TR, but they cancel out OB. New saving equation Srivate * Satlie" (Y+ TR - C - T) + (T- (G+ TR)) remains the same as the old saving equation OC. Now saving equation Stvate Sat (Y- C-T- TR) (T- G+ TR) = Y - C - G, which is the same as the old saving equation O D. If households have more income, they spend more on investment and the end result will be the same