Assume that an economy is in equilibrium with a budget deficit of $130 billion, positive net exports of $453 billion, and a saving level of $1, 550 billion.If taxes are zero, then planned investment spending must be equal to:

Question

Quizplus · Accepted Answer

In equilibrium, savings (S) must equal investment (I) plus the budget deficit (BD) minus net exports (NX). Given S = $1,550 billion, BD = $130 billion, and NX = $453 billion, the equation is: I = S - BD + NX = $1,550 - $130 + $453 = $967 billion.

Assume That an Economy Is in Equilibrium with a Budget