Effect of Government budget deficit in a closed economy?
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Assume the following information for an imaginary, closed economy.
GDP = $100,000; Taxes = $22,000; Government purchases = $25,000; National saving = $15,000.Ā
This economy's government is running a
A) budget surplus of $3,000.
B) budget surplus of $12,000.
C) budget deficit of $3,000.
D) budget deficit of $12,000.
What is the effect of government budget deficit in an open economy?