jnu

[ritu]

If the excess of pvt sector saving over investment in a yaer in an economy increses by rs 700 crore..the net saving of govt sectr in a yaer decreases by rs 850crore nd the annual value of imports of goods nd services increases by rs 600 ,wot is the change in annual value of exports of goods nd services in the economy???

[aastha]

exports increases by 450 crores

[lovekesh]

a good resource for these concepts is Mankiw's macroeconomics. You would have to have a economic intuition how capital outflow and current account are one and the same thing. After that, you can solve almost every question from this topic.
Good Luck

[ritu]

Hey lovkesh nd aastha...
If u cud still elaborate hw u arrived at the answer...??

[ritu]

Coz wot i thought regarding this question was that the  capital inflow wud  be net borrowings by govt which wud be (700-850)=-150...nd it wud relresent import of present purchasing power...since import increase by 600 we get total exports fall by -(150+600)=-750

But i guess i m wrong...so pls tell me where i went wrong
thanks guys

[anon_econ]

Ritu,
current account surplus = govt saving + pvt saving

[ritu]

Oh i think i m getting it nw...if we see at national level...acc to pvt nd govt sector situation of saving...we could have imported only to the mark of 150...bt since actual figures show imports to be 600 so this means thete wad a positive inflow of capital...worth 450...only then we can still have a current account deficit of 150 as shown by govt dissavings......right?