International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Transcribed Image Text:Assume that production in Thailand is valued at $120,000.
National income is therefore $120,000. Of their income,
workers save $3,000, pay $7,000 in taxes, spend $102,000
on consumer goods, and spend $4,000 on imports.
Businesses spend $6,000 in new investment spending.
Foreigners spend $2,000 on exports.
To avoid any problems of inflation or unemployment, the
government should have a budget deficit or surplus of:
a. $3,000 surplus
b. $2,000 deficit
c. $7,000 deficit
d. $2,000 surplus
e. $0 deficit
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