The following question requires some critical thought. Admittedly, Econ is defin
ID: 1184980 • Letter: T
Question
The following question requires some critical thought. Admittedly, Econ is definitely not a strength of mine. I've been thinking of a clear answer for these questions but cannot come up with anything of substance.
Q.
The two least discussed sectors of the economy are the government (also called the
public sector) and the rest of the world (also called the foreign sector). An economy
that includes foreign trade, or trade with the rest of the world, is called an open
economy, and its opposite is a closed economy.
A.
Consider the savings equals investment equation,
I = S +(T-G) + (M-X). How is investment affected when an economy
moves from being closed to being open? Explain your answer.
B.
Consider the leakages equals injections equation,
I + G + X = S + T + M. What is the effect of a public sector balanced budget (where G=T) on the economy, according to this equation? What if the government runs a budget deficit?
Explanation / Answer
Please rate with 5 stars :) This is what I could come up with :)
Consider
C + I + G + (X
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