Scenario 8-3. Assume the following information for an imaginary, open economy.
Consumption = $1,000; investment = $300; net exports = $100;
taxes = $230; private saving = $200; and national saving = $150.
-Refer to Scenario 8-3. This economy's government is running a
A) budget deficit of $50.
B) budget deficit of $80.
C) budget surplus of $50.
D) budget surplus of $80.

Question

Quizplus · Accepted Answer

The government budget balance is calculated as taxes minus government spending. National saving is the sum of private saving and public saving (government budget balance). Given national saving is $150 and private saving is $200, the government is running a budget deficit of $50 ($150 - $200 = -$50).