Overview
The national income account equation for a closed equation economy is given by
{% Y = C + I + G %}
where
- {% Y %} = National Income
- {% C %} = Consumption
- {% I %} = Investment
- {% G %} = Government Expenditure
International Trade
In the presence of trade with other nations (see international economics) , the equation becomes
{% Y = C + I + G + EX - IM %}
The current account balance is then defined as
{% CA = EX - IM %}
When the country exports more than it imports, it is said to have a current account surplus. If the amount imports exceeds the total
amount of exports, the country has a current account deficit.