Suppose that in an? economy, investment is? $400 billion, saving is? $400 billion, tax revenues are? $500 billion, exports are? $300 billion, and imports are? $200 billion. what is government expenditure and the government budget? balance?

By definition, government expenditure refers to the money used in the acquisition of goods and services for current use. In this case, the government expenditure is simply equivalent to investment.

Government expenditure =  $400 billion

From economics: I=S+T–G+M–X

Where

I = Investment

S = Savings

T= Tax revenues

G =Government budget

M = Import

X = Export

Rearraging to get G:

G = S – I + T + M – X

G = $400 billion - $400 billion + $500 billion + $200 billion - $300 billion

G = Government budget =  $400 billion

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