Consider a small open economy with desired national saving of Sd = 200 + 10,000rw and desired investment of Id = 1,000 - 5,000rw.If rw = 0.05,then net exports equal
A)100.
B)50.
C)-50.
D)-100.

Question

Quizplus · Accepted Answer

Net exports (NX) is equal to the difference between total saving and investment: NX = Sd - Id. 
Substituting the given values: 
NX = (200 + 10,000*0.05) - (1,000 - 5,000*0.05) 
NX = 750 - 750 
NX = -50

Therefore, the correct answer is C, which is -50. The negative value indicates a trade deficit or an excess of imports over exports.

Consider a Small Open Economy with Desired National Saving of Sd