If X - M = $0 and the government sector has a deficit of $250 billion, the private sector

Question

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If we rearrange the equation X - M = $0, we get X = M, which means that the total income in the economy (X) is equal to the total expenditures (M). If the government sector has a deficit of $250 billion, it means that its expenditures exceed its income by that amount. Therefore, the private sector (which includes households and firms) must have a surplus equal to the government deficit in order to balance the equation X = M. Thus, the private sector has a surplus of $250 billion. Therefore, the correct answer is D.

If X - M = $0 and the Government Sector