Question

Suppose that investment is $130 billion, saving is $110 billion, government expenditure on good and services is $120 billion, exports are $210 billion and imports are $220 billion.
What is the amount of tax revenue and the government budget balance?​

Answer 1

The amount of tax revenue is $130 billion and teh governemnt budget balance is negative 10 billion

Explanation:

We are given

I = 130 billion, S = 110 billion, G = 120 billion, X = 210 billion and M = 220 billion, we need to derive tax revenue = T??

At equilibrium; S+T +M = I+X+G or

110 + T + 220 = 130 + 210 + 120 or  

T + 330 = 460, implies tax revenue (T) = $130 billion

the government budget is calculated as follows:

Government budget = G-T = 120 minus 130 = -10 billion