ECON 11:28

ECON 11:28 - Two hours 40 multiple choice 3 exercises NCO = CO CI NCO = NX NCO = Net capital outflow Y = C I G NX Y C G = I NX Y C G = National

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Two hours, 40 multiple choice, 3 exercises NCO = CO – CI NCO = NX NCO = Net capital outflow Y = C + I + G + NX Y – C – G = I + NX Y – C – G = National Savings S = I + NX S = I + NCO When S > I, the excess of loanable funds flow abroad in the form of positive NCO When S < I, foreigners are financing some of the country investment, and NCO < 0 - Chinese are more than willing to buy bonds from the US - Equation that defines the output in a financial economy - Interest rate will rise if a country cannot sell all of its bonds Difference between saving and investment is the NCO CI – foreign purchase of products of the US (China buying US bonds, buildings, factories, oils) - if NCO is negative, then foreigners are more willing to buy US assets than US citizens are willing to buy assets abroad o i.e. US market is relatively safe Lack of saving or increased investment can lower NCO What can effect the Net Exports - Nominal Exchange rates (E): The rate at which one country’s currency for another
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This note was uploaded on 01/14/2012 for the course ECON 002 taught by Professor Eudey during the Fall '08 term at UPenn.

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ECON 11:28 - Two hours 40 multiple choice 3 exercises NCO = CO CI NCO = NX NCO = Net capital outflow Y = C I G NX Y C G = I NX Y C G = National

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