If net exports is a negative number, the government sector must ________ if the private sector is in a ________.
A) run a surplus; surplus
B) equal zero; deficit
C) run a deficit; surplus
D) The statement errs because the accounts are not related.

Question

Quizplus · Accepted Answer

If net exports are negative, it means the country is importing more than it is exporting, leading to a trade deficit. If the private sector is in a surplus, the government sector must run a deficit to balance the national accounts, as per the sectoral balances approach in macroeconomics.

If Net Exports Is a Negative Number, the Government Sector