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 XM, 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
|