$$\begin{array} { | l | l | }
\hline \text { Item } & \begin{array} { l }
\text { Billions of } \
\text { dollars }
\end{array} \
\hline \text { Exp orts of goods and services, } X & 500 \
\hline \text { Imports of goods and services, } M & \
\hline \text { Net taxes, } T & 750 \
\hline \text { Government exp enditure, } G & \
\hline \text { Saving, } S & 1,000 \
\hline \text { Investment, } I & \
\hline
\end{array}$$
-Using the data in the above table, if the private sector runs a surplus of $250 billion, imports will equal $1,000 billion if

Question

$$\begin{array} { | l | l | } 
\hline \text { Item } & \begin{array} { l } 
\text { Billions of } \
\text { dollars }
\end{array} \
\hline \text { Exp orts of goods and services, } X & 500 \
\hline \text { Imports of goods and services, } M & \
\hline \text { Net taxes, } T & 750 \
\hline \text { Government exp enditure, } G & \
\hline \text { Saving, } S & 1,000 \
\hline \text { Investment, } I & \
\hline
\end{array}$$
-Using the data in the above table, if the private sector runs a surplus of $250 billion, imports will equal $1,000 billion if

Quizplus · Accepted Answer

The private sector surplus is calculated as S - I. Given S = 1000 and the surplus is 250, I = 750. The government deficit is G - T. If the deficit is 750, then G = 0 (since T = 750). The balance of payments condition is X - M = (S - I) + (T - G). Substituting the values, 500 - M = 250 + 750, so M = 1000.

-Using the Data in the Above Table, If the Private