In a Saving-Investment Diagram for a Small Open Economy

question 17

Multiple Choice

In a saving-investment diagram for a small open economy

• A)the saving curve is vertical at some fixed level of output.
• B)the saving curve is horizontal at some fixed interest rate.
• C)the real interest rate is fixed at the world real interest rate.
• D)equilibrium requires that S^d = I^d.

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Definitions:

Direct Placement

A method of raising capital by selling securities directly to institutional investors like pension funds and mutual funds without public offering.

Long-term Debt

Refers to loans or borrowed capital that is repaid over a time frame longer than one year.

Prototype Financing

The process of securing funds to design, build, and test a prototype before mass production, critical in the development of new products or technologies.

Capital Provided

This term denotes funds given to a company or project by investors or lenders for the purpose of financing operations, growth, or investments.