Chapter 31

Chapter 31 is describing the difference between an open and closed economy. More importantly, it clearly demonstrates the affect net exports can cause and what it means to have a trade surplus or deficit. In addition, we revisit the equation in the previous chapters that discussed how savings is equal to net exports plus investment. Also, the net capital outflow equals the net exports. By looking at other economies, we can compare the dollar to other currencies in order to see whether the dollar value appreciated or depreciated.