Question
Consider the following Open Economy: (billions of dollars) Personal Disposable Income (Y D ) = Income (Y) - T +TR. Consumption (C) = 500 +
Consider the following Open Economy: (billions of dollars)
Personal Disposable Income (YD) = Income (Y) - T +TR. Consumption (C) = 500 + .9(YD).
Transfers (TR) = 100. Taxes = 400. Government Spending (G) = 500
Investment (I) = 550 - 1000*interest rate (r). Interest rate (r) = .05 (5%)
Exports (X) = 500. Imports (IM) = 600.
In this economy, Equilibrium Income is ___________, the Government Budget is __________ and the Balance of Trade is ___________________.
Select one:
a.
11,300 billion, Deficit of 200 billion, Deficit of 100 billion.
b.
11,300 billion, Surplus of 100 billion, Surplus of 100 billion.
c.
11,000 billion, Deficit of 200 billion, Deficit of 100 billion.
d.
11,000 billion, Surplus of 200 billion, Surplus of 100 billion.
e.
14,000 billion, Deficit of 100 billion, Deficit of 100 billion.
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