Consider a Large Open Economy

question 44

Essay

Consider a large open economy.What are the effects,in equilibrium,on the world real interest rate,domestic national saving,domestic investment,the domestic current account balance,foreign national saving,foreign investment,and the foreign current account balance in each of the following scenarios? Show a diagram to illustrate your results.
(a)current income rises in the foreign country
(b)the future marginal product of capital rises in the domestic country
(c)wealth rises in the foreign country

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Definitions:

Sufficient Power

The adequate ability or capacity to act or influence outcomes, decisions, or behavior.

Character Education

The teaching of moral and ethical values through education, aiming to develop responsible, respectful, and caring individuals.

Public Schools

Educational institutions that are funded and run by the government, providing free education to students from the local community.

Valuing Process

Valuing Process involves recognizing and considering the importance, worth, or usefulness of something or someone in decision-making, often requiring assessment or judgment of intrinsic or extrinsic qualities.