Question

If the country of Makebelieveia has a trade surplus, what can we say about its saving...

If the country of Makebelieveia has a trade surplus, what can we say about its saving and investment?

Select one:

a. National saving is greater than investment in Makebelievia

b. National saving is equal to investment in Makebelieveia

c. National saving is less than investment in Makebelieveia

d. National saving could be either greater than or less than investment in Makebelieveia

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Answer #1

The answer is a.

a. National saving is greater than investment in Makebelievia

According to the national income identity

if there is a trade surplus the national savings will be greater than the investment, the extra savings will be invested abroad.

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