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What would be the size of Investment (I) as per National Income Accounting Identity in an open economy,…

From the open-economy national income accounting identity \(Y = C + I + G + NX\) and disposable income \(Y - T = C + S\), subtracting yields the sectoral balances identity…

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What would be the size of Investment (I) as per National Income Accounting Identity in an open economy, if Budget Deficit (BD) = 150, Net Exports (NX) = –100 and Private Savings (S) = 1000 ?

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From the open-economy national income accounting identity Y=C+I+G+NXY = C + I + G + NX and disposable income Y−T=C+SY - T = C + S, subtracting yields the sectoral balances identity S−I=(G−T)+NX=BD+NXS - I = (G - T) + NX = \text{BD} + \text{NX}. Substituting private savings S=1,000S = 1{,}000, budget deficit BD=150\text{BD} = 150, and net exports NX=−100\text{NX} = -100 gives 1,000−I=150+(−100)=501{,}000 - I = 150 + (-100) = 50, so I=1,000−50=950I = 1{,}000 - 50 = 950.

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