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

question 93

Essay

In a large open economy,the home country's saving and investment equations are:
S^d = 200 + 1400 r^w and I^d = 300 - 400 r^w.
The foreign country's saving and investment equations are:
S^d = 50 + 600r^w and I^d = 75 - 100 r^w.
Calculate the equilibrium world real interest rate,saving and investment in each country,and the current account balance in each country.

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