A country finds itself in the following situation: a government budget surplus of $800; total domestic savings of $700, and total domestic physical capital investment of $1350. According to the national saving and investment identity, if investment increases by $500 while the government budget surplus and savings remain the same, what will be the new value of the trade deficit after the investment increase?

A country finds itself in the following situation: a government budget surplus of $800; total domestic savings of $700, and total domestic physical capital investment of $1350. According to the national saving and investment identity, if investment increases by $500 while the government budget surplus and savings remain the same, what will be the new value of the trade deficit after the investment increase?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter20: Exchange Rates And The Macroeconomy

Section: Chapter Questions

Problem 2TY

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