Thank you for visiting Assume an open economy in which GDP is 20 trillion If consumption is 14 trillion government spending is 3 trillion taxes are 2 trillion government. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Since when S>I or NX>0, Capital is leaving the country. Therefore, $2 trillion is the right answer (outflows)
Why do taxes exist?
Taxes are compulsory payments made by a government organization, whether city, regional, or federal, to people or businesses. Tax revenues are used to fund a variety of government initiatives, such as Medicare and Social Security programs as well as public infrastructure and services like roads and schools.
Briefing:
When S = I, NX are zero. It follows that S - I Equals NX.
$3 trillion in exports and $1 trillion in imports.
NX = X - M = 3 - 1 = $2 trillion.
Since when S>I or NX>0, Capital is leaving the country. Therefore, $2 trillion is the right answer (outflows)
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The complete question is-
Scenario: Open Economy S = I
In an open economy the GDP is $20 trillion this year. Consumption is $11 trillion, and government spending is $1 trillion. Taxes are $3.5 trillion; Transfers are $2 trillion. Exports are $3 trillion, and imports are $1 trillion.
(Scenario: Open Economy S = I) According to the Scenario: Open Economy S = I, how much are capital inflows (KI)?
-$3 trillion (outflows)
$3 trillion (inflows)
-$2 trillion (outflows)
$2 trillion (inflows)
$4 trillion (inflows)
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Rewritten by : Jeany
