Consider the identity Sp I = CA + D, where Sp is private sector saving, I
Question:
Sp – I = CA + D,
where Sp is private sector saving, I is investment, CA is the current account surplus, and D is the government deficit.
(a) Show that the above identity holds.
(b) Explain what the above identity means.
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S p 1 CA D a By definition S p Y d C Y NFP TR INT T C Next recall that Y C I ...View the full answer
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