The following is the data for a hypothetical island economy. All values are in billions of real dollars. Assume that the island economy does not engage in trade with any other countries.
Gross Domestic Product$2,000
Taxes $ 400
Government Purchases$ 500
Investment $ 300
Consumption $1,200
What is the status of the federal budget?
A. Surplus of $100 billion
B. Deficit of $400 billion
C. Surplus of $300 billion
D. Deficit of $100 billion
Do I use the forumula
S= Y-C-G
=2000-1200-500= 300? C.
I'm guessing though that That gives me the savings, how do I get the government spending equation?
By the way thank you all for helping me on the previous questions.
2007-07-30
21:11:45
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