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Unformatted text preview: Sav < I Savings = Investment (Y C T) + (T G) = I Budget Deficit T <G Budget Surplus T>G What is the LR implication of a budget deficit? Interest rates will rise in the long run, level of savings and investment decreases (crowding out) Net exports (NX) = exports imports Open Economy Y = C + I + G + NX Y C G = Savings = I + NX S = I + NX S I = NX NX = NCO (net capital outflow) Savings (S) = I (Investment) + NCO...
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This note was uploaded on 01/26/2010 for the course ECON 101 taught by Professor Balon during the Spring '09 term at Linn Tech.
- Spring '09