Answered: Why are net exports and net capital…

Why are net exports and net capital outflow always equal? Derive the relation between savings, domestic investment, and net capital outflow using the national income accounting identity.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section13.1: The International Flows Of Goods And Capital

Problem 1QQ

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Question

Why are net exports and net capital outflow always equal? Derive the relation between savings,
domestic investment, and net capital outflow using the national income accounting identity.

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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