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In a country, private savings equals \(600,\) the government budget surplus equals \(200,\) and the trade surplus equals100. What is the level of private investment in this economy?

Assume an economy has a budget surplus of \(1,000,\) private savings of \(4,000,\) and investment of 5,000 . a. Write out a national saving and investment identity for this economy. b. What will be the balance of trade in this economy? c. If the budget surplus changes to a budget deficit of \(1000,\) with private saving and investment unchanged, what is the new balance of trade in this economy?

What are some steps the government can take to encourage research and development?

In the late 1990 s, the U.S. government moved from a budget deficit to a budget surplus and the trade deficit in the U.S. economy grew substantially. Using the national saving and investment identity, what can you say about the direction in which saving and/or investment must have changed in this economy?

Based on the national saving and investment identity, what are the three ways the macroeconomy might react to greater government budget deficits?

How would you expect larger budget deficits to affect private sector investment in physical capital? Why?

What are some of the ways fiscal policy might encourage economic growth?

What are some fiscal policies for improving a society's human capital?

Explain how cuts in funding for programs such as Head Start might affect the development of human capital in the United States.

Under what conditions will a larger budget deficit cause a trade deficit?