Chapter 18, Problem 2SCQ

Assume an economy has a budget surplus of $\text{1},000$, private savings of $\text{4},000$, and investment of $\text{5},000$.

1. Write out a national saving and investment identity for this economy.
2. What will be the balance of trade in this economy?
3. If the budget surplus changes to a budget deficit of $\text{1}000\text{k}$ with private saving and investment unchanged, what Is the new balance of trade In this economy?