Hypothetical data on macroeconomic accounts

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The Table below provides hypothetical data on macroeconomic accounts for three countries represented by A, B, and C, and measured in billions of currency units. S = private household saving; T = taxes; G= government spending; and I = investment.

Calculate the Current Account balance for each country. (Remember, the current account balance = X - M; i. e., it is the negative of (M - X).)

State whether each nation has a current account surplus or deficit.

Identify each nation's demand for financial capital. (Remember the Chapter 10 formulation: demand for financial capital = supply of financial capital. See chapter or Week 4 slide. )

(Important note: you know that if X<M, foreigners supply financial capital. However, if X>M, then foreigners demand (our) financial demand;. So if a nation runs a trade (current account) surplus, the amount of the surplus counts as part of our nation's demand for financial capital, not supply of financial capital.)


A

B

B

S

7000

5000

5000

T

00

5000

5000

G

6000

3500

6500

I

8000

4000

4500

Reference no: EM131396066

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