$\begin{array} { l }
C = 40 + 0.8 Y \
I _ { g } = 40 \
X = 20 \
M = 30
\end{array}$
(Advanced analysis) The equations give information for a private open economy. The letters $Y , C , I _ { g } , X$, and $M$ stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in billions of dollars. This nation is experiencing
A) a trade surplus.
B) balance in its international trade.
C) a trade de?cit.
D) unemployment.

Question

$\begin{array} { l } 
C = 40 + 0.8 Y \
I _ { g } = 40 \
X = 20 \
M = 30
\end{array}$
(Advanced analysis) The equations give information for a private open economy. The letters $Y , C , I _ { g } , X$, and $M$ stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in billions of dollars. This nation is experiencing
A) a trade surplus.
B) balance in its international trade.
C) a trade de?cit.
D) unemployment.

Quizplus · Accepted Answer

Trade balance is calculated as exports minus imports. Here, $X - M = 20 - 30 = -10$, indicating a trade deficit because imports exceed exports.

C=40+0.8YIg=40X=20M=30\begin{array} { l } C = 40 + 0.8 Y \\I _ { g } = 40 \\X = 20 \\M = 30\end{array}C=40+0.8YIg​=40X=20M=30​

$\begin{array} { l } C = 40 + 0.8 Y \\I _ { g } = 40 \\X = 20 \\M = 30\end{array}$