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

question 65

Essay

A large open economy has desired national saving of S^d = 20 + 200r^w,and desired national investment of I^d = 30 - 200r^w.The foreign economy has desired national saving of = 40 + 100r^w,and desired national investment of = 75 - 400r^w.
(a)Calculate the equilibrium values of r^w,CA,CA_For,S,I,S_For,and I_For.
(b)Suppose S^d rises by 45,so that now S^d = 65 + 200r^w.Calculate the equilibrium values of r^w,CA,CA_For,S,I,S_For,and I_For.
(c)Suppose,with S^d back to S^d = 20 + 200r^w,as in part (a),that I^d rises by 45,to I^d = 75 - 200r^w.Calculate the equilibrium values of r^w,CA,CA_For,S,I,S_For,and I_For.

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Definitions:

Informal Economy

A network of people producing and circulating marketable commodities, labor, and services that for various reasons escape government control.

Bureaucratic Regulators

Officials or agencies responsible for enforcing rules and regulations within governmental or organizational structures.

Marketplace

A physical or virtual space where goods and services are exchanged, typically involving multiple buyers and sellers.

Agricultural Societies

Communities whose economies are based primarily on the production and maintenance of crops and farmland, often signifying a shift from hunter-gatherer lifestyles.