If X - M = $0 and the government sector has a deficit of $250 billion, the private sector

Question

Quizplus · Accepted Answer

The equation X - M = $0 represents the national income accounting identity where X represents total income and M represents total expenditures. This equation implies that total income must equal total expenditures. If the government sector has a deficit of $250 billion, it means that its expenditures exceed its income by $250 billion. Therefore, the private sector must have a surplus of $250 billion to balance the income and expenditure equation. Hence, the correct choice is C.

If X - M = $0 and the Government Sector