Explain why X - IM = (S - I) - (G - T). Now multiply both sides
Question:
IM - X = (I - S) + (G - T)
And remember that the trade deficit, IM - X, is the amount we have to borrow from foreigners to get
Borrowing from foreigners = (I - S) + (G - T)
Explain the common sense behind this version of the fundamental equation.
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There are different ways to derive the fundamental equation For example ...View the full answer
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Related Book For 
Macroeconomics Principles And Policy
ISBN: 9780324586213
11th Edition
Authors: William J. Baumol, Alan S. Blinder
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