Question Details

Economics Homework Help

Question

A small island nation is endowed with indestructible coconut trees. These trees live forever and no new trees can be planted. Every year $1 million worth of coconuts fall off the trees and can be eaten locally or exported to other countries. In past years the island nation ran current account surpluses and capital and financial account deficits, acquiring foreign bonds. It now owns $500,000 of foreign bonds. The interest rate on these bonds is 5% per year. The residents of the island nation consume $1, 025,000 per year. What are the values of investment, national saving, the current account balance, the capital and financial account balance, net exports, GDP, and GNP in this country?