Question: Which equation do I use here? I am confused as to if I should use the trade surplus or the trade deficit? United Kingdom in
Which equation do I use here? I am confused as to if I should use the trade surplus or the trade deficit?

United Kingdom in 2001. (Section 10.4) Saving and Investment Identity Problem 2 is adapted from ch.10 problem 44. 2. Imagine that the U.S. economy finds itself in the following situation: 0 a government budget deficit of $100 billion, 0 total domestic savings of $1,500 billion, and 0 total domestic physical capital investment of $1,600 billion. a. (2 points) According to the national saving and investment identity, what will be the current account balance? Is it a trade decit or trade surplus? Will international capital flow in or flow out? b. (2 points) What will be the current account balance if investment rises by $50 billion, while the budget deficit and national savings remain the same
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
