Consider a simple macro model with a constant price level and demand-determined output.The equations of the model are: C = 150 + 0.84Y,I = 400,G = 700,T = 0,X = 130,IM = 0.08Y.The trade balance at equilibrium national income is a
A)deficit of 504.8.
B)deficit of 460.0.
C)deficit of 330.0.
D)surplus of 125.0.
E)surplus of 15.3.

Question

Quizplus · Accepted Answer

To find the trade balance, calculate equilibrium national income (Y) using the equation Y = C + I + G + (X - IM). Solve for Y and then calculate the trade balance as X - IM. The trade balance is a deficit of 330.0.

Consider a Simple Macro Model with a Constant Price Level