Scenario 26-3.Assume the following information for an imaginary,open economy.
Consumption = $1,000;investment = $200;net exports = -$50;
taxes = $230;private saving = $225;and national saving = $150.
-Refer to Scenario 26-3.This economy's government is running a
A)budget deficit of $75.
B)budget deficit of $80.
C)budget deficit of $50.
D)budget deficit of $100.

Question

Quizplus · Accepted Answer

The budget deficit is calculated as government spending minus taxes. National saving is the sum of private saving and the budget balance (government saving). Given national saving is $150 and private saving is $225, the budget balance is $150 - $225 = -$75, indicating a budget deficit of $75.