1There are three financial balances referred to in the above chart. Explain briefly what each of these balances represents. (2 marks)
2Identify the approximate years of US government budget surpluses. Identify which of the other financial balances moved into deficit to allow a government surplus to happen. (2 marks)
3Suppose that the other financial balance you have identified in part b) had not moved into deficit. This would have affected the economy in a way which would have made it impossible for there to be a government surplus. Identify and briefly explain the reasons for this. (2 marks)
4Under what circumstances is it possible for a country to run a government surplus and a domestic private sector surplus at the same time? (2 marks)
5Consider the entire world as a single economy. If the world private sector wishes to net save over time, what must be true of the government budget balance? Explain your answer. (2 marks)

the US economy from 1952-2015 (source withheld): Financial Sector Balances as a Percent of GDP, 1952 Q1 - 2015 Q4 14.00% Government sector Domestic Private Sector Foreign Sector 10.50% 7.00% 3.50% 0.00% -3.50% -7.00% -10.50% -14.00% 1952 1955 1959 1962 1966 1969 1973 1976 1980 1983 1987 1990 1994 1997 2001 2004 2008 2011 2015 the US economy from 1952-2015 (source withheld): Financial Sector Balances as a Percent of GDP, 1952 Q1 - 2015 Q4 14.00% Government sector Domestic Private Sector Foreign Sector 10.50% 7.00% 3.50% 0.00% -3.50% -7.00% -10.50% -14.00% 1952 1955 1959 1962 1966 1969 1973 1976 1980 1983 1987 1990 1994 1997 2001 2004 2008 2011 2015