Answer to Question #208145 in Microeconomics for shan

Question

Last year a country purchased $1.5 trillion worth of goods and services from foreign countries, sold $2 trillion worth of goods and services to foreign countries and had national saving of $1.25 trillion. What was the value of its domestic investment?

Answer 1

Imports = $ 1.5 Trillion

Exports = $ 2 Trillion

Savings = $ 1.25 Trillion

Net capital outflow = Net exports = $2 Trillion $-$ $1.5 Trillion = $ 0.5 Trillion.

Saving = Investment + Net Capital Outflow

$1.25 trillion = Investment + $ 0.5 Trillion

Domestic investment =$0.75Trillion