In an open economy, the government deficit is 600 and saving exceeds investment by 500, so...
In an open economy, the government deficit is 600 and saving exceeds investment by 500, so in equilibrium the trade deficit (IM − X) must be
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Homework Answers
Government deficit reduces the saving by 600, so there must be inflow of new capital from outside.
Net Export = S- I
= 600 - 500
= 100
Answer: (A)
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In an open economy, the government deficit is 600 and saving
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