Sector Balances after Period 1

• Answer: government's balance is -10; private sector's balance is 8; foreign sector's balance is 2

                                                 Domestic
              Government                         Private                           Foreign

        \                    /            \                    /            \                    /
         \                  /  Spend: 100  \                  /  Import:  5  \                  /
          \     $ -10      /   --------->   \     $   8      /   --------->   \     $   2      /
           \              /    Tax:    90    \              /    Export:  3    \              /
            \            /     <---------     \            /     <---------     \            /
             \__________/                      \__________/                      \__________/

                $ -10               +             $   8              +              $   2          ≡   0

• The sector balances sum to 0