GNP Expenditure on a Country's Goods and services o The national income identity for an open economy Is Y=C+I+G+EX-IM =C+I+G+ CA Expenditure by domestic Net expenditure by foreign individuals and institutions individuals and institutions Copyright 2012 Pearson Education. All rights reserved 13-11
Copyright © 2012 Pearson Education. All rights reserved. 13-11 GNP = Expenditure on a Country’s Goods and Services • The national income identity for an open economy is Y = C + I + G + EX – IM = C + I + G + CA Expenditure by domestic individuals and institutions Net expenditure by foreign individuals and institutions
Expenditure and Production in an Open Economy CA= EX-IM=Y-(C+I+G) When production domestic expenditure exports> imports current account >o and trade balance >0 when a country exports more than it imports, it earns more income from exports than it spends on imports net foreign wealth is increasing When production domestic expenditure, exports imports current account<o and trade balance o when a country exports less than it imports, it earns less income from exports than it spends on imports net foreign wealth is decreasing Copyright 2012 Pearson Education. All rights reserved 13-12
Copyright © 2012 Pearson Education. All rights reserved. 13-12 Expenditure and Production in an Open Economy CA = EX – IM = Y – (C + I + G ) • When production > domestic expenditure, exports > imports: current account > 0 and trade balance > 0 – when a country exports more than it imports, it earns more income from exports than it spends on imports – net foreign wealth is increasing • When production < domestic expenditure, exports < imports: current account < 0 and trade balance < 0 – when a country exports less than it imports, it earns less income from exports than it spends on imports – net foreign wealth is decreasing
Fig. 13-2: U.S. Current Account and Net Foreign Wealth 1976-2009 Current accou net foreign wealth(billions of dollars) eign wealth Current account -1000 -2000 2600 19761978198019821984198619881990199219941996199820002002200420062008 Source: U.S. Department of Commerce, Bureau of Economic Analysis Copyright 2012 Pearson Education. All rights reserved 13-13
Copyright © 2012 Pearson Education. All rights reserved. 13-13 Fig. 13-2: U.S. Current Account and Net Foreign Wealth, 1976–2009 Source: U.S. Department of Commerce, Bureau of Economic Analysis
U.S. Current Account and Net Foreign Wealth1982-2011 经常账户 Copyright 2012 Pearson Education. All rights reserve 11
Copyright © 2012 Pearson Education. All rights reserved. 11 U.S. Current Account and Net Foreign Wealth, 1982–2011
Chinas Current Account and Net Foreign Wealth1982-2011 净外国财富 一经常账户 Copyright 2012 Pearson Education. All rights reserved 10
Copyright © 2012 Pearson Education. All rights reserved. 10 China’s Current Account and Net Foreign Wealth, 1982–2011