Suppose we are modeling a "closed" economy.The only way its government can obtain more goods and services than it can claim with net tax revenues is for

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Quizplus · Accepted Answer

In a closed economy, there are no exports or imports, so options A and B are irrelevant. The only way a government can obtain more goods and services than it can claim with net tax revenues is by using the economy's savings to finance its deficit. This occurs when saving exceeds investment, allowing the government to borrow the excess savings.

Suppose We Are Modeling a "Closed" Economy