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The notation is Y=GNP=nationalincomeC=consumptionI=privateinvestmentG=governmentspendingX=exportsM=importsT=taxesS=savings There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government
The notation is Y=GNP=nationalincomeC=consumptionI=privateinvestmentG=governmentspendingX=exportsM=importsT=taxesS=savings There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures. This relationship is given by BCAX M(SI)+(TG). Given this, in order for a country to reduce a BCA deficit, which of the following must occur? For a given level of S and I, the government budget deficit (T - G) must be reduced. For a given level of I and (TG). S must be increased. For a given level of S and (TG),I must fall. All of the options would work to reduce a BCA deficit
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