Assume exports = 300, imports = 400, tax revenues = 1,100, government purchases = 1,400, private domestic saving = 900.Then the level of private domestic investment is

Question

Quizplus · Accepted Answer

Private domestic investment can be calculated using the national income identity equation: Y = C + I + G + NX, where Y is GDP, C is consumption, I is investment, G is government purchases, and NX is net exports (exports - imports). Rearranging the equation, we get I = Y - C - G - NX. 
Using the given values, we can find GDP as: 
Y = C + I + G + NX 
Y = 900 + I + 1,400 + (300 - 400) 
Y = 1,200 + I 
Therefore, I = Y - C - G - NX 
I = (1,200 + I) - 900 - 1,400 - (-100) 
I = 700 
Therefore, private domestic investment is $700.

Assume Exports = 300, Imports = 400, Tax Revenues =