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Germany consumers have $50 in income "their gross domestice product". They spend $35 on consumer goods "$25 on Germany goods and $10 on imports", they save $8, and pay $7 in taxes. The government collects $7 in taxes and spends $10 on locally-made goods. Firms borrow $7 and make $7 in domestic investment spending. The government and firms buy no imports what is Germany's current account balance?
I'm pretty sure the answer would be $25 - 10 7 = 22 but I'm wondering how does GDP come into play at all for a surplus or deficit. Would I subtract 50-22 and then have a $28 surplus? Thanks in advance!
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