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Sagot :
Answer:
S>I
Explanation:
[tex]Y = C + I + G + (X - M) \\Y = C + I + G + NX[/tex]
National saving is the income of the nation left after paying for government purchases and consumption. So,
[tex]S = Y - C - G[/tex]
[tex]Y = C + S + G \\[/tex]
Plugging this back into the equation for GDP, we get
[tex]Y = C + I + G + NX \\C + S + G = C + I + G + NX \\S = I + NX \\S = I + NX\\S = I + NCO[/tex]
where, NCO is Net capital outflow.
When there is balanced trade, we have
[tex]X = M \\i.e \\NX = 0 \\So, S = I[/tex]
When there is trade surplus, we have
[tex]X>M \\NX > 0 \\NCO > 0 \\Y > C + I + G[/tex]
Thus,
[tex]S > I[/tex]
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