What is the amount of the government budget deficit-surplus

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Reference no: EM131376352

Consider the following simple model of an economy:

C = 1,000 + .85(Yd)

I = 780 - 800r

G = 1,000

T = -50 + 0.09(Y)

IM = 100 + 0.1(Y)

EX = 100 + 0.1(Yf), (Assume Foreign Income = 10,000)

Let r* = 11%

Then use this information to solve the following problems.

f. What is the amount of the government budget deficit/surplus?

g. What is the amount of the structural budget deficit/surplus?

h. What is the amount of the cyclical budget deficit/surplus?

i. Is the economy experiencing a trade deficit or surplus? How much?

j. If output were equal to 10,000, What would be the level of real/total/actual investment? Of planned investment? Of unplanned investment? Please calculate these values. Show all work.

Reference no: EM131376352

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