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If the lockdown measure due to a further spread of COVID-19 pandemic is extended to international...

  1. If the lockdown measure due to a further spread of COVID-19 pandemic is extended to international flows of goods and services across the New Zealnd border, saving in the national income account must be equal to the investment in New Zealnand?

True , false or uncertain?

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Answer #1

a. Due to the ongoing COVID-19 pandemic, production processes of and services have come to a hault in almost all the affected nations. Level of investment has fallen drastically because people have lost confidence in the investment ventures. If the lockdown measure due to a further spread of COVID-19 pandemic extends to international flows of goods and services across the border of New Zealand, then trading will be affected and imports and exports will thereby fall. This would mean that the investments are declining. Also, many businesses are experiencing losses due to which income is falling and as a result savings have declined. Therefore, it is false to say that saving in the national income account must be equal to the investment in New Zealand.

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