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15 May, 00:25

Savings, Investment Spending, and the Financial System - End of Chapter

Assume a hypothetical economy that is open to capital inflows and outflows, so that net capital inflow equals imports (IM) minus exports (X). b. The economy has the following properties: X = $85 million IM = $135 million Budget balance = $100 million Private savings = $250 million Calculate investment (I) in millions of dollars. I = $ million

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Answers (1)
  1. 15 May, 01:46
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    Answer: $400 million

    Explanation:

    Given that,

    X = $85 million

    IM = $135 million

    Budget balance = $100 million

    Private savings = $250 million

    Net capital inflow = imports (IM) - exports (X)

    = $135 million - $85 million

    = $50 million

    Investment spending = Private savings + Budget balance + Net capital inflow

    = $250 million + $100 million + $50 million

    = $400 million
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Home » Business » Savings, Investment Spending, and the Financial System - End of Chapter Assume a hypothetical economy that is open to capital inflows and outflows, so that net capital inflow equals imports (IM) minus exports (X). b.
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