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Just need help with question #4 and double-checking previous answers. I know what the savings-investment spending identity is, but I'm confused by the question and
Just need help with question #4 and double-checking previous answers. I know what the savings-investment spending identity is, but I'm confused by the question and the answer considering that savings and investment don't equate. An explanation would be very helpful, thank you!
Savings and Investment Spending in Econoland In the Econoland economy: Consumption $250 billion Government spending $138 billion Imports $77 billion Investment spending $1200 billion Exports $60 billion Compute the following based on the data in the table. 1. GDP in Econoland GDP = C+I+ G +X - IM= 250 + 1200 + 138 + 60 - 77 = 1,571 billion 2. National savings in Econoland (Open economy) National savings = GDP - C - G = 1,571 - 250 - 138 = 1,183 billion 3. Net capital inflow into Econoland NCI = IM - X = 77 - 60 = 13 billion 4. The savings-investment spending identity for the Econoland economy Savings-investment spending identity in an open economy = Investment spending = National savings + NCI 1200 = 1,183 + 13 1200 = 1196Step by Step Solution
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