Consider a country that runs a budget deficit of $7 million and a trade deficit of $8 million. If privatesavings equals $2 million, which of the following is correct?The supply of financial capital is $15 million, so private investment equals $13 million.O The supply of financial capital is $15 million, so private investment equals $15 million.O The supply of financial capital is $9 million, so private investment equals $1 million.O The supply of financial capital is $10 million, so private investment equals $3 million.

A budget deficit occurs when government budgets more spending than there is revenue available to pay…

Answered: Consider a country that runs a budget…

Consider a country that runs a budget deficit of $7 million and a trade deficit of $8 million. If private savings equals $2 million, which of the following is correct?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter31: The Impacts Of Government Borrowing

Section: Chapter Questions

Problem 2SCQ: Assume an economy has a budget surplus of 1,000, private savings of 4,000, and investment of 5,000....

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Question

Consider a country that runs a budget deficit of $7 million and a trade deficit of $8 million. If private
savings equals $2 million, which of the following is correct?
The supply of financial capital is $15 million, so private investment equals $13 million.
O The supply of financial capital is $15 million, so private investment equals $15 million.
O The supply of financial capital is $9 million, so private investment equals $1 million.
O The supply of financial capital is $10 million, so private investment equals $3 million.

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