If private domestic saving is 960, private domestic investment is 780, and the government spends 300 more than it receives in tax revenues, then it follows that

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Quizplus · Accepted Answer

The trade deficit can be calculated using the formula: Trade Deficit = Private Domestic Saving - Private Domestic Investment - Government Budget Deficit. Here, the government budget deficit is 300 (since spending exceeds tax revenue by 300). So, Trade Deficit = 960 - 780 - 300 = 120.

If Private Domestic Saving Is 960, Private Domestic Investment Is