In the context of the national savings and investment identity, briefly describe the main sources for both
Question:
In the context of the national savings and investment identity, briefly describe the main sources for both the supply of and demand for capital in the U.S. economy. There are two main sources for the supply of capital in the U.S. economy: saving by individuals and firms, called S, and the inflow of financial capital from foreign investors, which is equal to the trade deficit M – X, or imports minus exports. There are two main sources of demand for financial capital in the U.S. economy: private sector investment, I, and government borrowing, where the government needs to borrow when government spending, G, is higher than the taxes collected, T.
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Database management systems
ISBN: 978-0072465631
3rd edition
Authors: Raghu Ramakrishan, Johannes Gehrke, Scott Selikoff