1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ivan
3 years ago
15

In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem,

you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in your analysis.
Recall the components that make up GDP. National income (Y) equals total expenditure on the economy's output of goods and services. Thus, where C = consumption, I = investment, G = government purchases, X = exports, M = imports, and NX = net exports:
Y =
Also, national saving is the income of the nation that is left after paying for Therefore, national saving (S) is defined as: S =
Rearranging the previous equation and solving for Y yields Y = . Plugging this into the original equation showing the various components of GDP results in the following relationship:
S =
This is equivalent to S =, since net exports must equal net capital outflow (NCO, also known as net foreign investment).
Now suppose that a country is experiencing a trade surplus. Determine the relationships between the entries in the following table, and enter these relationships using the following symbols: > (greater than), < (less than), or = (equal to).
Business
1 answer:
liberstina [14]3 years ago
5 0

Answer:

a. Y = C + I + G + NX

b. National saving is the income of the nation that is left after paying for <u>current consumption (C) and government purchases (G)</u>.

c. S = Y - C - G

d. Y = S + C + G

e. S = I + NX

f. S = I + NCO

g. <u>Outcomes of a Trade Surplus</u>

Exports > Imports

Net Exports > 0

C + I + G < Y

Saving > Investment

Net Capital Outflow > 0

Explanation:

a. Y = C + I + G + X - M …………………. (1)

If we assumed X is greater than M, we have:

NX = X - M

Substituting NX = X - M into equation (1), we have:

Y = C + I + G + NX

b. Also, national saving is the income of the nation that is left after paying for <u>current consumption (C) and government purchases (G)</u>.

c. Therefore, national saving (S) is defined as: <u>S = Y - C - G</u>.

d. Rearranging the previous equation and solving for Y yields <u>Y = S + C + G</u>.

e. Plugging this into the original equation showing the various components of GDP results in the following relationship:

S + C + G = C + I + G + NX

S = C + I + G + NX - C - G

<u>S = I + NX</u>

f. This is equivalent to <u>S = I + NCO</u>, since net exports must equal net capital outflow (NCO, also known as net foreign investment).

g. Now suppose that a country is experiencing a trade surplus. Determine the relationships between the entries in the following table, and enter these relationships using the following symbols: > (greater than), < (less than), or = (equal to).

Note: The omitted table in the question given as follows:

Outcomes of a Trade Surplus

Exports ____ Imports

Net Exports _____ 0

C + I + G _____ Y

Saving ____ Investment

Net Capital Outflow ___ 0

Therefore, the answer is given as follows:

<u>Outcomes of a Trade Surplus</u>

Exports > Imports

Net Exports > 0

C + I + G < Y

Saving > Investment

Net Capital Outflow > 0

You might be interested in
One joint of marijuana impairs a person more than having a blood alcohol content of _____ %.
Yanka [14]
Answer: 0.8%


hope this helps
4 0
3 years ago
The term ___________ is a popular way to describe the recession-expansion pattern followed by the economy.
UNO [17]
The term BUSINESS CYCLE is a popular way to describe the rescission-expansion pattern followed by the economy. 
5 0
3 years ago
Peeples, Inc., has a book value of equity of $13,500. Long-term debt is $7,700. Net working capital, other than cash, is $1,990.
Reil [10]

Answer:

hope you like my answer

Explanation:

6 0
3 years ago
Jane is 20 years old and is a sophomore at Lake University. She is a full-time student and does not have any gross income. Jane
OLga [1]

Answer:

c. Jane grandparents cannot claim her as a dependent because Jane provided more than half of her own support.

Explanation:

Based on the information given the statements regarding the dependency rules for Jane that is true is Jane grandparents cannot in any way claim Jane as a dependent reason been that Jane provided more than half of her own support due to the fact that she her s total support for is the amount of $30,000 which as well include a scholarship of the amount of $5,000 to help cover tuition in which Jane used the amount of $12,000 of her savings while her grandparents on the other hand only provided the amount of $13,000 out of the Total support of $30,000.

3 0
2 years ago
Terrell Trucking Company is in the process of setting its target capital structure. The CFO believes that the optimal debt-to-ca
Semenov [28]

Answer:

a. Terrell's Optimal Capital Structure is 40:60. It means to obtain optimal capital structure in-order to increase value of firm, Terrell should finance 40% of its Assets through Debt and remaining through Common Equity.

b. The optimal Capital Structure is the point where company's WACC is minimized. So, 40:60 is the ratio where Terrell's WACC will be minimized.

Explanation:

The goal of Management is to increase Shareholders' wealth and not to generate profits because wealth is something that is for long-run whereas Profits are temporary. Management would accept projects having negative NPV if its goal is to maximize Profit.

Maximizing Shareholders' wealth means to increase the Share Price whereas Generating a higher EPS is Profit Maximization Strategy. So, you should look for that Capital Structure Point where the Company's Stock Price is Highest.

Thanks!

4 0
2 years ago
Other questions:
  • Which of these statements about contingent workers is true?
    11·1 answer
  • Banks offer higher interest rates on eurocurrency deposits than on deposits made in the home currency because eurocurrency depos
    14·1 answer
  • When a famous painting becomes available for sale, it is often known which museum or collector will be the likely winner. Yet, t
    10·1 answer
  • What questions might you ask yourself when developing your personal brand? Check all that apply. What am I not good at? What mak
    10·1 answer
  • What are the minimum educational requirements to be a childcare teacher?
    15·1 answer
  • Cheryl wants to become a fashion designer someday. Which of these goals is under her control? A. Getting a department store to b
    14·1 answer
  • Wizard Corp. needs to take out a one-year bank loan of $600,000 and has been offered loan terms by two different banks. One bank
    9·1 answer
  • *WILL GIVE BRAINLY*
    14·1 answer
  • The bank allows you to borrow money up to a specific amount
    13·2 answers
  • According to the master syllabus, should you purchase outside textbooks for the courses?
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!