Final answer:
The question discusses the necessary increase in government spending to achieve potential real GDP and the effects of changes in budget balance on the trade deficit.
Step-by-step explanation:
The question deals with an economic situation where we see a discrepancy between actual real GDP and potential real GDP, which implies that the economy is not operating at full capacity.
To determine the government spending needed to reach full employment output, we would use an equation that includes a target real GDP (Y), tax rates, spending multipliers, import rates, etc. Based on the step-by-step calculations provided, we solve for 'G' (government spending) to find out how much it needs to be increased to bridge the gap between actual and potential GDP levels.
In another example, a change in the budget position from a surplus to a budget deficit of 1000, with unchanged private saving and investment, will lead to a new balance of trade. This is because the additional borrowing required by the government causes an increase in the demand for financial capital, leading to a potential trade deficit if domestic savings are not sufficient to cover the investment and government spending needs.