A crucial national income accounting identity sets the government budget deficit equal to

Question

Quizplus · Accepted Answer

The correct national income accounting identity that sets the government budget deficit equal is S - I - NX, where S is savings, I is investment, and NX is net exports. This identity reflects the sectoral balances approach, showing that if the government spends more than it earns (deficit), it must be financed by some combination of increased private savings, decreased investment, or a decrease in net exports.

A Crucial National Income Accounting Identity Sets the Government Budget