Question: You are given the data below for 2008 for the imaginary country of Amagre, whose currency is the G. Consumption 350 billion G Transfer payments

You are given the data below for 2008 for the imaginary country of Amagre, whose currency is the G.

Consumption 350 billion G

Transfer payments 100 billion G

Investment 100 billion G

Government purchases 200 billion G

Exports 50 billion G

Imports 150 billion G

Bond purchases 200 billion G

Earnings on foreign investments 75 billion G

Foreign earnings on Amagre investment 25 billion G

Given this information we are asked to compute net foreign investment. Some of us are taking earnings on foreign investments - Foreign earnings on Amagre investment = 50 billion G. And others are citing the NFI formula and subtracting imports from exports to get -100 billion G. Which would be correct and why?

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