Page 115 - Macroeconomics. book docx_Neat

These policies aim to improve economic stability and growth.

Relationship Between the Foreign Sector and Macroeconomics

The foreign sector affects:

- National income.

- Employment levels.

- Aggregate demand.

- Economic growth.

- Balance of payments stability.

Macroeconomic Identities

In a closed economy:

Y = C + I + G

In an open economy:

Y = C + I + G + (X - M)

Where:

Y = National income

C = Consumption

115