In an open economy, national saving minus domestic investment is equal to the
Correct answer: A. current account balance
- A. current account balance
- B. government budget balance
- C. trade tariff revenue
- D. nominal exchange rate
Explanation
The national income accounting identity states that saving minus domestic investment equals net exports, which broadly corresponds to the current account balance. A positive value indicates that the economy lends funds abroad, while a negative value indicates reliance on foreign saving. The other options are not the relevant accounting identity.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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