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Suppose the market for loanable funds is described by the equations I = 18 - 6r and S = 8 + 4r.
a)Find the relationship between net capital outflow and the world interest rate rw.
b)If net exports are described by NX = 16 - 4X,find the relationship between NX and the world interest rate at the equilibrium exchange rate.
c)For rʷ = 1.4,what is the elasticity of NX with respect to rʷ?
d)What is the relationship between the equilibrium exchange rate and the world interest rate? Discuss your result.
Payment Interval
The frequency at which payments are made, such as monthly, quarterly, or annually.
Compounded Annually
Interest on an investment or loan calculated once a year, taking into account the interest that has accrued in the previous period.
Current Economic Value
An estimation of the present worth of an asset or company based on its capacity to generate income in the current economic environment.
Compounded Monthly
A method where interest is calculated monthly and added to the principal sum, resulting in interest on interest.
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