Principles of Macroeconomics / Unit 15 MAC 1402 short lesson, about 20 seconds
The Identity That Governs Everything
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The idea
Private saving plus the net inflow from abroad equals private investment plus government borrowing. It is an identity, so it holds always. Every result in this unit is a consequence of it.
In practice
Rearranged, investment equals private saving, plus public saving, plus the inflow from abroad.
Where people slip
Check which side each term sits on before computing. A surplus moves a term across.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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