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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

In an open economy, national saving equals domestic investment

a. plus the net outflow of capital abroad.

b. minus the net exports of goods and services.

c. plus the government’s budget deficit.

d. minus foreign portfolio investment.

To determine

Exchange rate between Paris and New York.

Explanation

Option (a):

Saving is equal to investment. In other words, it is equal to domestic investment and the investment made in the foreign country. Thus, option “a” is correct.

Option (b):

Decreasing the value of net export from the investment made in the foreign country does not give national saving. Thus,  option “b” is incorrect...

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