A country finds itself in the following situation: a government budget surplus of $800; total domestic savings of $700, and total domestic physical capital investment of $1350. According to the national saving and investment identity, if investment increases by $500 while the government budget surplus and savings remain the same, what will be the new value of the trade deficit after the investment increase?

A country finds itself in the following situation: a government budget surplus of $800; total domestic savings of $700, and total domestic physical capital investment of $1350. According to the national saving and investment identity, if investment increases by $500 while the government budget surplus and savings remain the same, what will be the new value of the trade deficit after the investment increase?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 44P: Imagine that the U.S. economy finds itself in the following situation: a government budget deficit...

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