Homework Answers
16. Private domestic saving,S = $245 billion
Government surplus, (T-G) = $500 billion
Private domestic investment, I = $1,125 billion
S+ (M-X) =I+(G-T)
245 +(M-X) = 1,125 +(-500)
M-X = 625 -245
M-X = $380 billion
So, trade deficit = $380 billion.
17. A country's level of trade tells how much of its production it exports.
18. The equilibrium occurs where AS equals AD.So, the equilibrium level of real GDP= $ 100 billion and price level = 160.
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