Suppose That the Economy Is in Equilibrium, with the Government

question 36

Multiple Choice

Suppose that the economy is in equilibrium, with the government budget in deficit and with exports greater than imports.According to the circular-flow model, how does saving relate to investment?  

• A) Saving must exceed investment. 
• B) Saving must equal investment. 
• C) Saving must be less than investment. 
• D) Saving could be equal to or less than investment.

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Definitions:

Hepatic Portal System

A network of veins that carries blood from the gastrointestinal organs and spleen to the liver.

Abdominal Viscera

The internal organs within the abdominal cavity, including the stomach, liver, intestines, and others.

Capillaries

Small blood vessels that facilitate the exchange of water, oxygen, carbon dioxide, and many other nutrients and waste substances between blood and surrounding tissues.

Splenic Vein

A blood vessel that drains blood from the spleen, pancreatic veins, and the short gastric veins, and empties into the portal vein.