Chp. 13 - Open-Economy Macroeconomics

Chp. 13 - Open-Economy Macroeconomics - Chp. 13 -...

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Chp. 13 - Open-Economy Macroeconomics Net Exports equal exports minus imports. o Also known as trade balance A trade deficit occurs when the value of goods and services that a nation imports exceeds the value of goods and services that it exports. A trade surplus exists when the value of exports exceeds the value of imports. Net capital outflow in the United States equals the acquisition of foreign assets by U.S. citizens minus the acquisition of U.S. assets by foreign citizens. o By definition, net exports equal net capital outflow (NX = NCO) o The value of NCO is positive when Americans purchase more foreign assets than foreigners purchase U.S. assets. GDP = Consumption + Investment + Government Purchases + Net Exports o Y = C + I + G + Nx By subtracting C and G from both sides, you get: Y - C - G = I + Nx o National Saving equals total income minus consumption and government purchases.
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Chp. 13 - Open-Economy Macroeconomics - Chp. 13 -...

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