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Problem 2. National income is 2000, 10% of which is net factor payments from abroad. Taxes are 300, transfers 100, and interest on public

Problem 2. National income is 2000, 10% of which is net factor payments from abroad. Taxes are 300, transfers

Problem 2. National income is 2000, 10% of which is net factor payments from abroad. Taxes are 300, transfers 100, and interest on public debt 100. The government maintains a budget deficit of 5% of GDP. Investment is 500. The trade deficit is 90, and import is 120. (A) (B) (C) (E) Find all the missing values on the circular flow diagram. Draw the circular flow diagram and mark all the values. Is the government borrowing or lending? Is the economy borrowing or lending? From/to whom? How are private savings used? Find disposable income.

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