If a the government of Country Z is running a budget deficit and net exports are zero,then

Question

Quizplus · Accepted Answer

If the government of Country Z is running a budget deficit and net exports are zero, then it means that the government is spending more than it is receiving in revenue and there is no positive contribution from external trade. In this scenario, the only way the economy can balance this deficit is by borrowing from domestic sources or from abroad. As a result, the investment would be lower than the saving which implies that saving is greater than investment.

If a the Government of Country Z Is Running a Budget