Consider the following economy:-   Mariginal propensity to save = 0.2 Mariginal propensity to import = 0.2 Investment = $500 Governement spending = $300 Taxes = $ 200 Exports = $400 Autonomous import spending = $100 Given this information, What is initial current account balance for the economy? A - Current account deficit of $205 B - Current account deficit of $125 C - Current account surplus of $125 D - Current account surplus of $150 E - None of the above

Principles of Economics 2e
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Chapter23: The International Trade And Capital Flows
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Problem 44P: Imagine that the U.S. economy finds itself in the following situation: a government budget deficit...
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Consider the following economy:-

 

Mariginal propensity to save = 0.2

Mariginal propensity to import = 0.2

Investment = $500

Governement spending = $300

Taxes = $ 200

Exports = $400

Autonomous import spending = $100

Given this information,

What is initial current account balance for the economy?

A - Current account deficit of $205

B - Current account deficit of $125

C - Current account surplus of $125

D - Current account surplus of $150

E - None of the above

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