Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
Textbook Question
Chapter 23, Problem 46P

Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 % of Germany’s GDP; private savings is 2 0 % of GDP; and physical investment is 18 % of GDP.

1. Based on the national saving and investment identity, what is the current account balance?
2. If the government budget surplus falls to zero, how will this affect the current account balance?

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