Investment fluctuates more than other components us

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Investment fluctuates more than other components. U.S. trends for Current Account and Income U.S. current account deficits have grown time. Trade balance largest share (–%6 of GNI). National income identity: GNDI = (C + I + G) + CA Gross National Disposal income (GNDI) is income available including unilateral transfers paid to and received from abroad. National income (GNDI) is equal to gross national expenditure (GNE=C+I+G) plus the current account (CA). From this expression: GNDI > GNE if and only if CA > 0 This situation is one of current account surplus GNDI < GNE if and only if CA < 0 This situation is one of current account deficit National income identity: GNDI = C + I + G + CA Subtracting C and G from both sides, we obtain an expression for national saving (S = GNDI – C – G): S = I + CA => CA = S – I This is the current account identity S > I if and only if CA > 0 (Current account surplus) S < I if and only if CA < 0 (Current account deficit) The current account measures the difference between spending and income.
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The current account allows us to see whether the country is “living beyond its means” in any period. How is that possible? If income exceeds spending, the nation is saving more than is needed to finance investment spending. It can lend. If spending exceeds income, the nation is saving less than is needed to finance investment spending. It must borrow.
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  • Spring '10
  • BALLIE
  • National Income, current account, capital account, national income identity

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