Consider a Small Open Economy with Desired National Saving of S^d

question 41

Essay

Consider a small open economy with desired national saving of S^d = 20 + 200r^w and desired investment of I^d = 30 - 200r^w.
Calculate national saving,investment,and the current account balance in equilibrium when the real world interest rate is
(a)r^w = 0.025.
(b)r^w = 0.05.
(c)r^w = 0.0.
(d)Now suppose something causes desired national saving to increase by 10,so that it is now S^d = 30 + 200r^w.Repeat parts (a),(b),and (c).
(e)Suppose,with desired national saving at its original level of S^d = 20 + 200r^w,something causes desired investment to rise by 10,to I^d = 40 - 200r^w.Repeat parts (a),(b),and (c).

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Definitions:

Cohesion

The force that holds molecules of the same substance together, important for phenomena such as surface tension and the movement of water through plant vessels.

Osmotic Pressure

The force exerted by a solution to move water across a semipermeable membrane, aiming to equalize solute concentrations on both sides.

Ionic Bonds

Chemical bonds formed between two ions with opposite charges, typically between a metal and a non-metal, where one atom transfers electrons to another.

Phytoremediation

The use of plants to remove, degrade, or contain environmental contaminants in soil, water, or air.