In a Small Open Economy in Equilibrium

question 32

Multiple Choice

In a small open economy in equilibrium:

• A)saving is fixed, and investment is determined by the investment function and the world interest rate.
• B)investment is fixed, and saving is determined by the saving function and the world interest rate.
• C)saving is fixed, and investment is determined by the trade balance.
• D)investment is fixed, and saving is determined by the trade balance.

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Definitions:

Brokerage Fees

Charges levied by a broker for executing transactions or providing specialized services.

Accrued Interest

Accrued interest is interest that has been incurred but not yet paid, often relating to bonds or loans over the period between interest payment dates.

Equity Method

An accounting method in which the investment in common stock is initially recorded at cost, and the investment account is then adjusted annually to show the investor’s equity in the investee.

Stock Investments

Financial assets representing ownership in a company or corporation, typically traded on stock exchanges.