Suppose you are using a Keynesian model to analyze an economy and you are given the following information about this economy.

Suppose you are using a Keynesian model to analyze an economy and you are given the following information about this economy.

Aggregate Expenditure = C + I + G + (X -M)

C = consumption spending = 20 + 0.5(Y – T)

T = autonomous taxes = $ 10 million

I = investment spending = $ 100 million

G = government spending = $20 million

(X – M) = net exports = $10 million

Yfe = Full employment GDP = $320 million

P = aggregate price level = is constant and does not change

1. Given this information, is the government of this economy running a balanced budget, a budget surplus, or a budget deficit? Explain your answer.

2. Given this information, describe this country’s trade balance. Explain your answer.