3. In 2015, the U.S. federal budget deficit (how much greater government spending was than taxes) was

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3. In 2015, the U.S. federal budget deficit (how much greater government spending was than taxes) was about 2.5 percent of GDP. That year the trade deficit (how much imports surpassed exports) was about 3 percent of GDP.

Also in 2015, investment in the U.S. economy exceeded U.S. private savings by about 5 percent of GDP.

a. What is the relationship among these three balances?

b. What do they tell us about who financed the U.S.

budget deficit in 2015?

c. What do they suggest about the extent of crowding out of private investment in the U.S. economy in 2015?

(Institutionalist)

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Economics

ISBN: 9781259193156

10th Edition

Authors: David Colander

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