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

question 79

Essay

Consider a small open economy with desired national saving of S^d = 1000 + 1000r^w and desired investment of I^d = 1000 - 500r^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.

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