Thank you for visiting In an open economy GDP is 8 trillion this year Consumption is 6 trillion and government spending is 1 trillion Taxes are 0 5 trillion. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Answer:
Deficit; $2 trillion
Explanation:
Given that,
GDP = $8 trillion this year
Consumption = $6 trillion
Government spending = $1 trillion
Taxes = $0.5 trillion
Exports = $1 trillion
Imports = $2 trillion
GDP = Consumption + Government spending + Investment spending + Net exports
$8 = $6 + $1 + Investment spending + ($1 - $2)
$8 = $7 + Investment spending + (-$1)
$9 - $7 = Investment spending
$2 trillion = Investment spending
The government is running a budget deficit because the amount of government spending exceeds the amount of tax revenue.
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Rewritten by : Jeany
