Consider a Large Open Economy

question 44

Essay

Consider a large open economy.What are the effects,in equilibrium,on the world real interest rate,domestic national saving,domestic investment,the domestic current account balance,foreign national saving,foreign investment,and the foreign current account balance in each of the following scenarios? Show a diagram to illustrate your results.
(a)current income rises in the foreign country
(b)the future marginal product of capital rises in the domestic country
(c)wealth rises in the foreign country

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Definitions:

Blood-Brain Barrier

A semi-permeable barrier of endothelial cells that prevents most substances in the blood from entering the brain, thereby maintaining the brain's chemical environment.

Toxic Substances

Materials or compounds that can cause harm to living organisms through ingestion, inhalation, or skin absorption.

Neurons

Specialized cells of the nervous system that transmit information through electrical and chemical signals.

Sensory Neuron

Neurons responsible for converting external stimuli from the environment into internal electrical impulses towards the CNS.