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Safari File Edit View History Bookmarks Develop Window Help ! ) * 70% E Thu 10:52 PM E Michigan State University EC 202 Intro to Macroeconomics - Fall15 - MACOMBER: Ch. 11 | || | +-I. www.saplínglearning.com/ibiscms/mod/ibis/view.php?id=2113393 Apple iCloud Twitter wikipedia Yahoo! News Popular www.buzzfeed.com C Reader IApp Michigan State... www.saplinglea... Textbook Media TBMReader Economics que... national incom... Macintosh HD My Assignment Slenderman's Shadow v1.3 Attempts score10/30/2015 10:00 AM 35/100 Gradebook Attempts Score Print Calculator N64 Saves 100 Question 11 of 16 3 Mapoob sapling learning cit: (M-X) 1-S- Assume that Latvia has domestic investment of $1500 billion, private domestic savings of $3000 billion, and a overnment deficit of $2000 billion. Based on the national saving and investment identity, what is its trade deficit government spending rises by $1000 billion? Enter your answer in billions of dollars 100 ficit: (M-X) I-S-(T- 6 70 lus (X-M)-S+(C 115+ Trade deficitbillion Trade deficit = | $ | | | billion 100 10 12 13 15 Previous Give Up & View Solution O Check Answer Next Exit Hint

Explanation / Answer

Demand for financial capital:     Domestic investment + Govt. Deficit
Supply of financial capital:  Private domestic savings + Trade deficit

Equate demand and supply.

Private domestic savings + Trade deficit = Domestic investment + Govt. Deficit
$3,000 billion + Trade deficit = $1,500 billion + $3,000 billion
Trade deficit = $1,500 billion

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