Question: Use Equation (13.4), repeated below, to demonstrate how an increase in the budget deficit must increase the trade deficit if neither consumption nor investment changes.

Use Equation (13.4), repeated below, to demonstrate how an increase in the budget deficit must increase the trade deficit if neither consumption nor investment changes. What must happen if there is an increase in the budget deficit in a closed economy?

[(G + TR)-T] = SHousehold-1-NX

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