Exam 4: Saving and Investment in Closed and Open Economies

Saving-Investment Diagram -Based on the Saving-Investment Diagram,if the difference between values G and E measures the net capital outflow,then ________.

Saving-Investment Diagram -Based on the Saving-Investment Diagram,if the difference between values G and E measures the net capital outflow,then ________.

Suppose consumption is $500 billion,investment is $120 billion,government purchases equal $90 billion,and net exports are negative $20 billion.The saving rate Is ________.

Suppose the world economy is divided into two halves.In Region A,all economies experience a decrease in desired saving,while desired saving is unchanged in Region B.If there is open trade and perfect capital mobility across the two regions,which of the following is true?

If we observe an economy in which desired saving has changed,but there has been no change in actual investment,we may infer that ________.

If desired saving increases in a small open economy,net exports (net capital outflow)rise.What happens to net exports if desired saving rises in most of the world's economies at the same time?

Suppose GDP is $800 billion,net taxes equal $150 billion,government purchases are $160 billion,investment is $120 billion,and net exports are $5 billion.The private saving rate Is ________.

In an economy open to international trade ________.

In an economy open to international trade where the interest rate at which saving and investment would be equal is ________ the world real interest rate ________.

If there is a decrease in world investment ________.

An increase in ________ in an open economy of any size leads to ________.

Suppose an economy has a GDP of $10 trillion,and that its national saving rate is 20%.If investment is 25% of GDP,the value of net exports is ________.

If taxes are reduced,will most people save more or less than before? Does national saving rise or fall? Explain.

Increases in ________ typically lead to decreases in ________.

Which of the four government policies to stimulate saving is essential? That is,which policy can on its own,regardless of the other policies,determine the level of the national saving rate?

When a U.S.firm sells a good abroad for,say,100 euros (assume $1=1euro),U.S.net exports increase by $100.These $100 in exports can be accounted for as $100 increase in capital outflow because ________.

Saving-Investment Diagram -Based on the Saving-Investment Diagram,if the world real interest rate is indicated by A,then ________.

Which of the following would lead domestic investment to rise?

Which of the following would lead domestic investment to rise?

Why is it important,for an open economy,that investment not be consistently higher than saving?