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Posted on 2004-08-16

This is a question regarding economics...

There is a fundamental identity that states NX = NFI. It makes sense if derived mathematically, but someone asked me to explain it logically, and I wasn't able to.

I mean, if I export something, what the identity implies is that I'm investing abroad. How does this work exactly (as in a practical explanation).

There is a fundamental identity that states NX = NFI. It makes sense if derived mathematically, but someone asked me to explain it logically, and I wasn't able to.

I mean, if I export something, what the identity implies is that I'm investing abroad. How does this work exactly (as in a practical explanation).

4 Comments

http://www.swcollege.com/econ/mankiw1e/cdrom/ch30/notes.html

and look for "NFI = NX"

It should help.

and look for "NFI = NX"

It should help.

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