Question: You are given the simple open economic model: C + I + G + (X-M) = GDP = AI = C + S + (T-
You are given the simple open economic model: C + I + G + (X-M) = GDP = AI = C + S + (T- R). Please derive the relationships that this model implies for the Government Budget, International Trade Balance (X-M) and Market for Non Current Consumption (I-S). What happens to the model if we impose a Mandatory Government Balanced Budget? What would an International Trade Surplus imply for the Government Budget if our Non Current Consumption Market is in Balance? Show analysis and calculations.
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