A large open economy has desired national saving of Sd = 20 + 200rw,and desired national investment of Id = 30 - 200rw.The foreign economy has desired national saving of 
= 40 + 100rw,and desired national investment of
= 75 - 400rw.
(a)Calculate the equilibrium values of rw,CA,CAFor,S,I,SFor,and IFor.
(b)Suppose Sd rises by 45,so that now Sd = 65 + 200rw.Calculate the equilibrium values of rw,CA,CAFor,S,I,SFor,and IFor.
(c)Suppose,with Sd back to Sd = 20 + 200rw,as in part (a),that Id rises by 45,to ?Id = 75 - 200rw.Calculate the equilibrium values of rw,CA,CAFor,S,I,SFor,and IFor.
Definitions:
Capital Structure
Capital structure refers to the way a corporation finances its assets through a combination of debt, equity, and hybrid securities.
Preferred Stock
A type of corporate ownership that ranks above common stock in terms of asset and earnings claims, typically carrying predetermined dividend payouts.
Common Stock
A form of corporate equity ownership, a type of security representing ownership in a corporation.
Market Price
The rate at which an asset or service is exchanged in a competitive marketplace.
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