In: Economics
In an open economy, GDP is $7400 billion, consumption is $4550 billion, government expenditures are $1200 billion, investment is $2400 billion, and net export is -$750 billion. What are the national savings and NCO
Ans.
National Savings(S) = GDP - Goverment Expenditure - Consumption
= 7400 - 1200 - 4550
= 1650
NCO (Net Capital Outflow) = Net Exports
So, NCO = -750 billion
OR
NCO = S(national saving) - Investment
= 1650 -2400
= -750
Also you can calculate national savings by the following method. result will be the same.
National Savings = I - NCO
= 2400 - 750
= 1650