In an open economy, GDP is $7400 billion, consumption is $4550 billion, government expenditures are $1200...

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

Expert Solution

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

Rahul Sunny answered 8 months ago

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