A Large Open Economy Has Desired National Saving of S^d

question 12

Multiple Choice

A large open economy has desired national saving of S^d = 1200 + 1000r^w,and desired national investment of I^d = 1000 - 500r^w.The foreign economy has desired national saving of = 1300 + 1000r^w,and desired national investment of = 1800 - 500 r^w.The equilibrium world real interest rate equals

• A)0.05.
• B)0.10.
• C)0.15.
• D)0.20.

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Definitions:

Public Good

An offering of goods or services to society's members at no cost, made available by public institutions or private bodies or individuals, not aiming to generate profits.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available for everyone to use without diminishing their availability to others.

Market Failure

Market Failure occurs when the allocation of goods and services by a free market is not efficient, often requiring intervention.

Social Costs

The total cost to society, both direct and indirect, arising from the production or consumption of goods and services, including externalities.