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(Advanced analysis) The following equations give information for a private open economy.
C=40+0.8Y Ig=40 X=20 M=30
The letters Y, C, Ig, X, and M stand for GDP, consumption, gross investment, exports, and imports, respectively.
Figures are in billions of dollars. This nation is experiencing __________ .

Respuesta :

Answer: Trade Deficit ($10 Billion).

Explanation:

C=40+0.8Y

Ig=$40 billion

X=$20 billion

M=$30 billion

where,

Y - GDP

C - Consumption

Ig - Gross investment

X - Exports

M - Imports

Balance of trade or Trade balance = Exports - Imports

Since, Imports are greater than the exports, so the nation is experiencing a trade deficit.

Trade deficit = Imports - Exports

= $30 - $20

= $10 billion

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