Question

If there is no government and no foreign trade, then:

• A. \(G = T = M = X >1\)
• B. G = T = M = X = 1
• C. G = T = M = X = 0
• D. \(G = T = M = X <1\)

Answer 1

The Correct Option is C

In a closed economic system devoid of government and international commerce, the following variables would be nil:

• G (Government Spending): The absence of a governing body eliminates government expenditures.
• T (Taxes): With no government in place, no taxes would be levied.
• M (Imports): The lack of foreign trade implies no imports would occur.
• X (Exports): Similarly, the absence of international trade means no exports would take place.

Consequently, the economic state for this situation is accurately represented as: G = T = M = X = 0.