Elementary discussions of the relationship between changes in income and
savings and investment and exports and imports can be found in almost
every basic principles of economics text. Excellent coverage of the topics
discussed here can be found in N. Gregory Mankiw's intermediate text,
Macroeconomics, which is published by Worth Publishers. The
relevant material is in Chapters 9, 10 and 11 in the 2nd and 3rd editions---the
relevant pages for the 3rd edition are pages 250 through 323. The relevant
chapters in the 6th edition are Chapters 10, 11 and 12. An alternative is
to read the Canadian Edition of this book, written by Gregory Mankiw and
William Scarth and also published by Worth Publishers. The relevant chapters
in the second edition, which was published in the year 2001, are Chapters
9, 10 and 11, pages 276 through 364. These materials also provide excellent
preparation for what will be covered in the next lesson.
You should also download and read the second and third essays in John E.
Floyd, Expositional Essays in Macroeconomics, which are in
the file eemac.pdf available from this site. The material
in these essays should be useful in developing a better understanding of the
forces determining the levels of consumption and investment
outlined in the first topic of this Lesson. Since a small amount of
calculus is also used in this Lesson, some readers may find it useful
to work through pages 7-32, 127-140 and 174-177 of Alpha C. Chiang,
Fundamental Methods of Mathematical Economics, published by
the McGraw-Hill Book Company. Additional material in the early pages of
that book can be worked through by anyone with insufficient background
to understand the material in the pages assigned above.