If a country has Y C + I + G, then it has
A)positive net capital outflow and positive net exports.
B)positive net capital outflow and negative net exports.
C)negative net capital outflow and positive net exports.
D)negative net capital outflow and negative net exports.

Question

If a country has Y > C + I + G, then it has
A)positive net capital outflow and positive net exports.
B)positive net capital outflow and negative net exports.
C)negative net capital outflow and positive net exports.
D)negative net capital outflow and negative net exports.

Quizplus · Accepted Answer

In an open economy, the national income identity is Y = C + I + G + NX, where Y is national income, C is consumption, I is investment, G is government spending, and NX is net exports. If Y > C + I + G, then NX must be positive, indicating positive net exports. Positive net exports imply that a country exports more than it imports, which corresponds to lending to the rest of the world or positive net capital outflow.

If a Country Has Y > C + I