If private domestic saving exceeds private domestic investment by $220 billion and government spending exceeds tax revenue by $340 billion, then

Question

Quizplus · Accepted Answer

The excess of private domestic saving over private domestic investment (in this case, $220 billion) is equal to the trade deficit (which means the country is importing more than it is exporting). Therefore, the trade deficit is $220 billion. 
The excess of government spending over tax revenue (in this case, $340 billion) represents the budget deficit. It does not directly affect the trade balance. Therefore, options A, B, D, and E are incorrect.

If Private Domestic Saving Exceeds Private Domestic Investment by $220