Question

If the quantity of financial capital supplied is equal to the quantity of financial capital demanded then, the national savings and investment identity is written as (M - X) - S

Answer 1

False

Step-by-step explanation:

If the quantity of financial capital supplied is equal to the quantity of financial capital demanded then, the national savings and investment identity is written as S + (M - X) = I + (G - T)

Where S = Private sector saving.

I= Private sector investment.

G= Government spending.

T=Government income, i.e. tax.

X =Exports.

M=Imports.