Suppose output is $1000 billion,government purchases are $200 billion,desired consumption is $700 billion,and desired investment is $150 billion.Net foreign lending would be equal to
A)-$150 billion.
B)-$50 billion.
C)$50 billion.
D)$150 billion.

Question

Quizplus · Accepted Answer

Net foreign lending (NFL) can be calculated as follows:
Output (Y) = Consumption (C) + Investment (I) + Government purchases (G) + Net exports (NX) + NFL
$1000 billion = $700 billion + $150 billion + $200 billion + NX + NFL
Simplifying the equation, we get:
NX + NFL = $-50 billion
Since net exports are not given, we can only find the value of NFL. Therefore, NFL = $-50 billion, which means that the country is a net borrower from foreign countries. 
Hence, the correct option is B) -$50 billion.

Suppose Output Is $1000 Billion,government Purchases Are $200 Billion,desired Consumption