A small island nation is endowed with indestructible coconut trees. These trees live forever and no new trees can be planted

A small island nation is endowed with indestructible coconut trees. These trees live forever and no new trees can be planted

 

answer:

GDP = $1,000,000 = total domestic production of coconutsIncome Receipts on Investment (IRI) = $25,000GNP = GDP + IRI = $1,025,000C = $1,000,000G = 0S = GNP – C – G = $25,000CA = $25,000 (You can see this from the balance of payments accounts, IRI has a creditbalance of $25,000)FA = – $25,000 (You can see this from the balance of payments accounts as well. There is adebit balance of $25,000 for the increase in the US ownership of foreign assets.) I=S-CA = 0

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