Examlex

Solved

Suppose the Market for Loanable Funds Is Described by the Equations

question 61

Essay

Suppose the market for loanable funds is described by the equations I = 180 - 16r and S = 8 + 24r. Suppose also that the world interest rate is 8 percent.
a) Calculate domestic investment, domestic saving, and net capital outflow.
b) If the net exports curve is given by NX = 142 - 2X, where X is the real exchange rate, calculate the equilibrium real exchange rate and net exports.
c) How does the real exchange rate change when the world interest rate decreases to 7 percent?
d) Discuss your results.


Definitions:

Libido

A term used in psychoanalytic theory to denote the energy associated with sexual instincts and drives.

Freud

Sigmund Freud, an Austrian neurologist who founded psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Libido

The psychological and emotional energy associated with the drive for sexual activity and expression.

Psychosexual Energy

A concept in psychoanalysis referring to the driving force behind human behavior as motivated by sexual desire and pleasure.

Related Questions