In an open economy, government spending was $30 billion, consumption was $70 billion, taxes were $20 billion, GDP was $100 billion, and investment spending was $10 billion. As a result, there was:

Question

Quizplus · Accepted Answer

In an open economy, GDP = C + I + G + (X - M). Here, GDP is $100 billion, C is $70 billion, I is $10 billion, G is $30 billion. So, $100 = $70 + $10 + $30 + (X - M), which simplifies to (X - M) = -$10 billion, indicating a trade deficit and a net capital inflow of $10 billion.

In an Open Economy, Government Spending Was $30 Billion, Consumption