ECON 1001 Lecture Notes - Autarky
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6 Sep 2018
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Chapter 8: saving, investment, and the financial system. Consider the breakdown of national income as follows: Y= c + i + g + nx. If the economy is closed, so that net exports are zero, this reduces to: But the left hand side of the equation above is the definition of national saving: In other words, in a closed economy, savings must equal investment. This is just another version of the insight. From the above, we can write national saving as: S = (y t c) + (t g)
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