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
The Boeing Company created a team made up of employees at the same level from production, planning, quality control, tooling, de
SCORPION-xisa [38]

i am a troll im here just to mess with people after i do this i with go on my main account and answer you question

5 0
3 years ago
Bacchus Enterprises has $12B in book value of common stock selling at a book to market rate of 1.35 and a beta of 1.5. The combi
goldfiish [28.3K]

Answer: 16.3%

Explanation:

Given the details in the question, the cost of preferred capital can be calculated using the CAPM method.

Cost of preferred stock using the Capital Asset Pricing Model is:

= Risk free rate + Beta * ( Market return - Risk free rate)

= 4% + 1.23 * (14% - 4%)

= 16.3%

7 0
3 years ago
Interview any local business owner and request him/her to identity any business problem that they are experiencing
Goshia [24]
I interviewed a local talent management firm's about her business problem that they currently experienced.

Currently, they faced problem from the power of social media. In the past, many artists relied on talent management firm to gain exposure, but today, they can find that exposure through social media. (i.e : youtube, facebook)
7 0
3 years ago
Ace Construction Company contracts to build a retirement community on land owned by Smith. Jones, an adjoining landowner, expect
Arada [10]

Answer:

d.) Jones is an incidental beneficiary and has no right to sue for Ace Construction's breach of the contract.

Explanation:

Jones was not a direct party to the contract, in fact, any profit which he was supposed to receive was incidental in nature and thus he cannot sue Ace Construction's breach of the contract.

4 0
3 years ago
Financial statements with data for two or more successive accounting periods placed in columns side by side, sometimes with chan
RideAnS [48]
The above is referred as Comparative statements. A comparative statement is an archive that contrasts a specific budgetary proclamation and earlier period articulations or with the same monetary report produced by another organization. Examiner and business supervisors utilize the wage explanation, monetary record and income proclamation for relative purposes.
6 0
3 years ago
Other questions:
  • Radwyn Horticulture Is fixed overhead expenses last month came to $7,699.45. It is known that one salesperson sold 191 saplings,
    14·1 answer
  • 4. Describe a nonprice competition strategy that you have seen a company use. Do you think this strategy was effective? Why or w
    12·1 answer
  • The demand for cat food is given by D ( x ) = 140 e − 0.03 x where x is the number of units sold and D(x) is the price in dollar
    13·1 answer
  • Felicia knits scarves and sells them to her friends. The first week, she knits four scarves and sells three for $50 each. The ne
    15·2 answers
  • A greenfield venture is when a company builds a subsidiary from scratch in a foreign country instead of acquiring an established
    13·1 answer
  • Why are the three separate occupations of plumbers, pipefitters, and steamfitters grouped together by the Department of Labor?
    6·1 answer
  • Cadmia, a small island nation, recently revised its income-tax law. The new law sought to increase taxes on wealthy corporations
    13·1 answer
  • All of the following are ways to avoid injuries when working on computers except ________. so you are looking up at it ensuring
    5·1 answer
  • Where are goods and services sold to consumers?
    7·1 answer
  • Historical Art is a new business. During its first year of operations, credit sales were $50,000 and collections from credit sal
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!