subject
Business, 05.05.2020 07:15 21vdawson

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 investment and consumption. 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 deficit. 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).

Outcomes of a Trade Deficit
Exports Imports
0 Net Exports
C + i+ G Y
Saving Investment
0 Net Capital Outflow

ansver
Answers: 1

Other questions on the subject: Business

image
Business, 22.06.2019 08:40, jade468
Examine the following book-value balance sheet for university products inc. the preferred stock currently sells for $30 per share and pays a dividend of $3 a share. the common stock sells for $16 per share and has a beta of 0.9. there are 2 million common shares outstanding. the market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. book-value balance sheet (figures in $ millions) assets liabilities and net worth cash and short-term securities $ 2.0 bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 8%) $ 5.0 accounts receivable 3.0 preferred stock (par value $15 per share) 3.0 inventories 7.0 common stock (par value $0.20) 0.4 plant and equipment 21.0 additional paid-in stockholders’ equity 13.6 retained earnings 11.0 total $ 33.0 total $ 33.0 a. what is the market debt-to-value ratio of the firm? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.) b. what is university’s wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)
Answers: 3
image
Business, 22.06.2019 11:00, 1129682
Factors like the unemployment rate, the stock market, global trade, economic policy, and the economic situation of other countries have no influence on the financial status of individuals. true or false
Answers: 1
image
Business, 22.06.2019 17:40, bsheepicornozj0gc
Within the relevant range, if there is a change in the level of the cost driver, then a. total fixed costs will remain the same and total variable costs will change b. total fixed costs will change and total variable costs will remain the same c. total fixed costs and total variable costs will change d. total fixed costs and total variable costs will remain the same
Answers: 3
image
Business, 23.06.2019 03:30, lailabirdiemae
Sub to "j h" yt channel to be entered in a giveaway $50 visa
Answers: 1
You know the right answer?
In a closed economy, saving and investment must be equal, but this is not the case in an open econom...

Questions in other subjects:

Konu
Computers and Technology, 10.03.2021 17:20