Suppose a New Technology Is Developed That Increases Investment Demand

question 4

Essay

Suppose a new technology is developed that increases investment demand in both a closed economy and in a small open economy that are in other ways identical.Holding other factors constant,will the quantity of investment spending increase more in the closed economy or in the small open economy? Explain.Assume prices are flexible and that factors of production are fully employed in both economies.Use the basic version of the open-economy model that abstracts from foreign debt accumulation.

---

Definitions:

Successes And Failures

Refers to the outcomes of actions, initiatives, or projects, indicating whether objectives were met (success) or not (failure).

Trait Approach

A theory in psychology that attributes personality and behavior to consistent patterns of inherent traits or characteristics within an individual.

Leadership

The process of guiding and influencing the behavior and work of others towards the achievement of specified goals in a given situation.

Right Stuff

The essential qualities or attributes required for a particular task or to excel in a specific field.