A particular economy has consumption of400 million a governm

A particular economy has consumption of$400 million, a government deficit of $100 million, taxes of $250 million, and income of $800 million. Which of the following statements must be true?

A. if investment is zero, there is no foreign trade imbalance

B. If the trade surplus is $50 million, investment will be equal to $100 million

C. if the capital account surplus is $50 million, investment will be equal to $100 million

D. if the trade surplus is $100 million, there will be investment

E. none of the above statements is necessarily true

Solution

E. none of the above statements is necessarily true

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