i) In an open economy, Y = C + I + G + NX. Using symbols from this identity, write an expression that defines national saving, S, in an open economy. S = _________________________ .  ii) True or False? In an open economy, the following is always true: S = I + NCO, where I is investment spending and NCO is net capital outflow.  iii)  In an open economy, a country’s net capital outflow is: a.) the value of domestic assets purchased by foreigners minus the value of foreign assets purchased by domestic residents b.) the value of foreign assets purchased by domestic residents minus the value of domestic assets purchased by foreigners.

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Public Saving

Public saving deals with the amount which has been in excess after meeting all the obligatory expenses and investment of the government. Taxes are collected by the government to meet its day-to-day expenditures. The obligatory expenses include all those expenses which are mandatory for the government. It cannot be avoided as it is inevitable.