In a Large Open Economy,the Home Country's Saving and Investment

question 89

Multiple Choice

In a large open economy,the home country's saving and investment equations are: S^d = 200 + 700r^w and I^d = 300 - 200r^w.The foreign country's saving and investment equations are: S^d = 50 + 300r^w and I^d = 75 - 50r^w.In equilibrium,the world real interest rate =

• A)0)10.
• B)0)20.
• C)0)25.
• D)0)40.

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