Question

Papau New Guinea has a trade deficit of $1500 billion, private savings of $3000 billion, and a government budget deficit of $3000 billion. Use the national savings and investment identity (and the numbers given) to determine the value of private investment.

Answer 1

Answer:

$1,500 billion

Explanation:

Data provided in the question:

Trade deficit = $1500 billion

Private savings = $3,000 billion

Government budget deficit = $3,000 billion

Now,

The value of private investment will be

= Private savings + Trade deficit  - Government budget deficit

= $3,000 billion + $1,500 billion - $3,000 billion

or

The value of private investment = $1,500 billion