Define national saving as private saving

Assignment Help Econometrics
Reference no: EM131133265

The U.S. trade deficit, current account deficit and investment

a. Define national saving as private saving plus the government surplus-i.e., as S + T - G. Now, using equation (19.5), describe the relation among the current account deficit, net investment income, and the difference between national saving and domestic investment.

b. Go to the statistical tables of the most recent Economic Report of the President (www.gpoaccess.gov/eop/). In Table B-1, "Gross Domestic Product," retrieve annual data for GDP, gross domestic investment, and net exports from 1980 to the most recent year available. Divide gross domestic investment and net exports by GDP for each year to express their values as a percentage of GDP.

c. The trade surplus in 1980 was roughly zero. Subtract the value of net exports (as a percentage of GDP) in 1981 from the value of net exports (as a percentage of GDP) in the most recent year available. Do the same for gross domestic investment. Has the decline in net exports been matched by an equivalent increase in investment? What do your calculations imply about the change in national saving between 1981 and the present?

d. When the United States began experiencing trade deficits during the 1980s, some officials in the Reagan administration argued that the trade deficits reflected attractive investment opportunities in the United States. Consider three time periods: 1981 to 1990, 1990 to 2000, and 2000 to the present. Apply the analysis of part (c) to each of these time periods (i.e., calculate the change in net exports and gross domestic investment as a percentage of GDP). How does the change in net exports from the 1980 values compare to the change in investment during each period? How did national saving change during each period?

e. Is a trade deficit more worrisome when not accompanied by a corresponding increase in investment? Explain your answer.

f. The question above focuses on the trade deficit rather than the current account deficit. How does net investment income (NI) relate to the difference between the trade deficit and the current account deficit in the United States? Find Table B-103 "U.S. International Transactions" from the Economic Report of the President. Use your work in part (b) to calculate NI as a percent of GDP. Is this value rising or falling over time? What is the implication of such changes?

1652_efa5f105-7e78-41c4-9428-7603abb7efff.png

Reference no: EM131133265

Questions Cloud

How do the issues luther present for debate : Martin Luther wrote these propositions in order to engage in a debate with fellow theologians. How do the issues Luther present for debate illustrate the problems in the Church of his day?
Prepare presentation on history of us army rank and insignia : Prepare a powerpoint presentation on the HISTORY OF THE UNITED STATES ARMY RANK AND INSIGNIA.This must be a well thought out and planned presentation to a class.
Describe where and how you acquired the necessary skills : Describe where and how you acquired the necessary skills that helped you excel through the progression of your education. Be sure to include examples.
How topic relates to one academic and professional pursuits : To help prepare for your Final Research Project, write an annotated bibliography to indicate the quality of the sources you have read. The bibliography must include no less than five scholarly sources that will be used to support the major points ..
Define national saving as private saving : Is a trade deficit more worrisome when not accompanied by a corresponding increase in investment? Explain your answer.
Write a research paper on monopoly and the robber barons : Write a RESEARCH PAPER ON "MONOPOLY AND THE ROBBER BARONS". The paper should include a thesis statement with information gained from research or investigation.
Discuss factors that generate a growing colonial challenge : Identify and discuss three factors that helped generate a growing colonial challenge to British rule during the period from the mid-1760's to the mid-1770s.
What were some of the topics luther raised : Identify the basic causes, both political and religious, of the bitter struggles of the sixteenth and seventeenth centuries in France, the Holy Roman Empire, and the Netherlands. Describe the political and religious dimensions of the settlement of..
Trying to determine its cost of debt : Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 15 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 7 percent annually ..

Reviews

Write a Review

 

Econometrics Questions & Answers

  What factors will influence the equilibrium effect of change

Although this is an admittedly simple model, it illustrates some issues that policy mak- ers need to think about when changing fiscal policy (e.g. a reduction in the budget deficit through a reduction in government spending). Explain in words what..

  Compute the profit earned from a typical consumer

b) What will be the firm's profit with perfect price discrimination c) To implement perfect price discrimination you will have to use salespersons. What is the maximum amount total you will spend on salespersons

  What is the initial cash flow for the project

A new machine is to be purchased for $150,000. The company believes it will generate $60,000 annually in revenue due to the purchase of this machine. The company will have to train an operator to run this machine.

  Profit maximization and shareholder wealth maximization

Explain difference between profit maximization and shareholder wealth maximization and determine which of these is a more comprehensive statement of a firm's economic objectives?

  What will be the main effects of the price floor

What might prompt the government to establish this price ceiling? Explain carefully the main effects. Demonstrate your answer graphically. Next, suppose that the government establishes a price floor of $4.60 for wheat. What will be the main effect..

  Determine the interest rate compounded qarterly

determine the present equivalent value of $400 paid every three months over a period of seven years in each of the follwing situations: a) the interest rate is 12% componded annualy. b) the interest rate is 12% compounded qarterly.

  Discuss some criteria that should be met

Discuss some criteria that should be met.

  Are aluminum and steel substitutes or complements

If the cross-price elasticity of aluminum with respect to steel is 2.0:a) what happen to the quantity demanded of aluminum if the price of steel increases b) Are aluminum and steel substitutes or complements

  How to make a short assessment with regard to the state

Based on the change in labor statistics between the two years, make a short assessment with regard to the state of the economy between the two years. 2001: lobor force participation rate 65.9 %, unemployment rate 7.22%,

  What is the solow growth rate

Assume that all wages and prices are completely and immediately flexible. If the growth rate of the money supply is 5%, the growth rate of the velocity of money is 8% and the inflation rate is 9%, what is the Solow growth rate?

  What is that price and how many tickets will be sold

a. If the theater uses third degree price discrimination, what price will it charge for daytime tickets How many will be sold b. If the theater uses third degree price discrimination, what price will it charge for nighttime ticket How many will be ..

  Conclude that abc corp is experiencing what capacity

Suppose that in 1999 ABC Corp produced 500 million units of a good at an average cost (LAC) of $2 and in 2000 ABC Corp expanded its plant capacity and produced 600 million units at an average cost (LAC) of $1.80.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd