Given an open economy described by the following national income Identity; Y=C+I+G+ X-M, i). Derive and...

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Given an open economy described by the following national income Identity; Y=C+I+G+ X-M, i). Derive and explain the economy's savings - trade balance equation. (5marks) ii). State the economy's net private savings. (1mark) (4marks) iii) What advice would you give to reduce trade deficit in the economy? iv). Suppose there are no external dealings in the above economy but the government decides to introduce tax, derive the economy's total savings equation. (5marks) Given an open economy described by the following national income Identity; Y=C+I+G+ X-M, i). Derive and explain the economy's savings - trade balance equation. (5marks) ii). State the economy's net private savings. (1mark) (4marks) iii) What advice would you give to reduce trade deficit in the economy? iv). Suppose there are no external dealings in the above economy but the government decides to introduce tax, derive the economy's total savings equation. (5marks)

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The detailed answer for the above question is provided below i The savings trade balance equation can be derived from the national income identity as ... View the full answer