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What is the government budget balance

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Reference no: EM131093723

Consider the closed economy of country A where KI = 0. In year 2009, government expenditure (G) is $300 billion, the total tax collected (T) is $900 billion and tax being transferred (TR) is $200 billion. The loanable fund market is currently in equilibrium, and the total demand equation (including SG) is DLF: r .04 - 0.000025Q, where r is the real interest rate, and that private saving, SP, equals $800 billion at equilibrium.

What is the government budget balance? Does the government have a budget surplus, budget deficit, or balanced budget?

Reference no: EM131093723

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