Suppose that the economy is in equilibrium, with the government budget in surplus and with saving greater than investment.According to the circular-flow model, how do imports relate to exports?

Question

Quizplus · Accepted Answer

In the circular-flow model, if saving is greater than investment and the government budget is in surplus, it implies that the economy is exporting more than it is importing, leading to a trade surplus. Thus, imports must be less than exports.

Suppose That the Economy Is in Equilibrium, with the Government