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?

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Definitions:

Strategy Formulation

The process of creating strategies to achieve organizational goals, typically involving analysis, planning, and decision-making.

Strategic Crafting

The deliberate planning and adjustment of strategies to better align with the changing business environment, ensuring an organization remains competitive and effective.

Strategic Outsourcing

The process of contracting out specific business functions or processes to a specialized external service provider in order to improve efficiency, reduce costs, or focus on core competencies.

Strategy Implementation

The execution phase where strategies and plans are put into action to achieve the organizational goals and objectives.