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2 February, 07:25

In an open economy the GDP is $12 trillion this year. Consumption is $8 trillion, and government spending is $2 trillion. Taxes are $0.5 trillion. Exports are $1 trillion, and imports are $3 trillion. 4. (Scenario: Open Economy S = I) What is the government budget balance?

A) a surplus of $1.5 trillion

B) a deficit of $1.5 trillion

C) a deficit of $0.5 trilli

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  1. 2 February, 08:01
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    B) a deficit of $1.5 trillion

    Explanation:

    The computation of the government budget balance is shown below:

    = Taxes - government spending

    = $0.5 trillion - $2 trillion

    = $1.5 trillion deficit

    For computing the government budget balance, we deduct the government spending from the taxes so that the correct amount can come

    All other information which is given is not relevant. Hence, ignored it
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