Problem
For an economy with a tax rate of 10%, the following expenditure functions are given:
C = 60 + 0.8Yd
G = 400
I = 140
NX = 10 - 0.20Y
a. Assume all taxes are collected. Is the Government experiencing a budget deficit in equilibrium? Why?
b. Is the economy experiencing a trade deficit? Why?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.