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Consider a Small Open Economy in Equilibrium with a Current

question 53

Essay

Consider a small open economy in equilibrium with a current account deficit.
(a)Draw a diagram showing this situation.
(b)What happens to national saving,investment,and the current account balance in equilibrium if government expenditures rise temporarily? Show this result in your diagram.


Definitions:

Triumph of the Name of Jesus

A ceiling fresco by Giovanni Battista Gaulli in the Church of the Gesù in Rome, displaying a dramatic illusionistic perspective that merges architecture with the painted space.

Giovanni Battista Gaulli

An Italian Baroque artist known for his vibrant frescoes and paintings, often by his nickname Baciccio.

Mandorla

An almond-shaped nimbus surrounding the figure of Christ or other sacred figure. In Buddhist Japan, a lotus-petal-shaped nimbus.

Polychrome Wood

Wood items decorated with multiple colors of paint, often found in sculptures, religious figures, and decorative arts.

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