Question

Which of the following equations best represents a trade deficit?

Considering:
a.I - private sector investment
b.G - government spending
c.T - taxes collected
d.S - private savings

Answer 1

A trade deficit is when a country's imports exceed its exports. It is represented by the equation (M-X) = I-S - (T-G).

Step-by-step explanation:

A trade deficit occurs when a country's imports exceed its exports. It is represented by the equation (M-X) = I-S - (T-G). In this equation, M represents imports, X represents exports, I represents domestic investment, S represents private savings, T represents taxes collected, and G represents government spending.