1. What is the meaning of an account labeled "statistical discrepancy" or "errors and omissions"? If this account is a credit, what does that imply about the measurement of other items in the balance of payments?

2. Why must the national income of a closed economy equal the national expenditures of that economy? What separates the two concepts in an open economy?

3. Explain why private national saving plus govern- ment saving equals the current account of the balance of payments.

4. It has been argued that the high correlation between national saving and national investment that Feldstein and Horioka first measured in 1980 is not evidence of imperfect capital mobility. What arguments can you offer for why they might have misinterpreted the data, and what do recent investigations of this issue imply about the degree of capital mobility throughout the world?