Assume that a simple model of the macroeconomy can be given as $G - T = (S - I) + (M - X)$, where G represents government spending, T represents taxes, S represents savings, I represents investment, and M and X represent imports and exports, respectively.
Which statement about this model is true about a budget deficit?
Private savings and the trade deficit must be balanced (total to zero).
Both private savings and the trade deficit must be positive.
Private savings and the trade deficit must be equal.
Private savings, the trade deficit, or both must be positive.
