Assume That in a Small Open Economy with Full Employment

question 96

Essay

Assume that in a small open economy with full employment, national saving is 300.
a.If domestic investment is given by I= 400 - 20r, where r is the real interest rate in percent, what would the equilibrium interest rate be if the economy were closed?
b.If the economy is open and the world interest rate is 10 percent, what will investment be?
c.What will the current account surplus or deficit be? What will net capital outflow be?

---

Definitions:

Relational Identity

An aspect of personal identity that is formed and defined through relationships with others, emphasizing the social connections and roles an individual has.

Collective Identity

A shared sense of belonging to a group, defined by common attributes, beliefs, or practices, contributing to a unified group consciousness.

Role Transition

The process of changing from one role to another, which can involve acquiring new skills, changing status, or adapting to new expectations.

Socialization

this is the process by which individuals learn and adopt the norms, values, behaviors, and social skills appropriate to their social positions.