A Large Open Economy Has Desired National Saving of Sᵈ

question 12

Essay

A large open economy has desired national saving of Sᵈ = 20 + 200 rʷ and desired national investment of Iᵈ = 30 - 200 rʷ.The foreign economy has desired national saving of Sᵈ = 40 + 100 rʷ and desired national investment of ᴵᵈ_For = 75 - 400 rʷ.
a.Calculate the equilibrium values of rʷ,CA,CA_For,S,I,S_For,and I_For.
b.Suppose Sᵈ rises by 45,so that now Sᵈ = 65 + 200 rʷ.Calculate the equilibrium values of rʷ CA,CA_For,S,I,S_For,and I_For.
c.Suppose with Sᵈ back to Sᵈ = 20 + 200 rʷ as in part a,that Iᵈ rises by 45,to Iᵈ = 75 - 200 rʷ.Calculate the equilibrium values of rʷ,CA,CA_For,S,I,S_For and I_For.

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Definitions:

Nonprofit Organization

An organization whose primary goal is not to make a profit but to benefit the public or a specific group of people.

Financial Remuneration

Payment for work or services, including salaries, wages, bonuses, or other forms of compensation.

Exchange

The trade of things of value between buyer and seller so that each is better off after the trade.

MBA

Master of Business Administration, a graduate degree that focuses on business administration and investment management.