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

question 52

Multiple Choice

Consider a small open economy with desired national saving of S^d = 200 + 10,000r^w and desired investment of I^d = 1000 - 5000r^w.If r^w = 0.05,then a rise in government spending of 50 with no change in private saving causes net exports to become

• A)100.
• B)50.
• C)-50.
• D)-100.

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Definitions:

Drive Theory

A psychological theory that posits that behavior is motivated by the desire to meet basic physiological needs.

Incentive Theory

A theory in psychology that describes motivation as being driven by an organism’s desire to pursue rewards and avoid punishments.

Motivation

The process that initiates, guides, and maintains goal-oriented behaviors, involving biological, emotional, social, and cognitive forces that activate behavior.

Incentive Theories

Theories in psychology focused on understanding how external rewards motivate behaviors and drive human actions.