Exam 5: Saving and Investment in the Open Economy

Consider a small open economy with desired national saving of Sd = 200 + 10,000rw and desired investment of Id = 1,000 - 5,000rw.If rw = 0.05,and output = 5,000,then absorption equals

A country has a current account surplus if

Assuming no change in the effective tax rate on capital,a decrease in the government budget deficit will reduce the current account deficit if and only if the decrease in the budget deficit

When there are two large open economies,if desired international lending by the domestic country exceeds desired international borrowing by the foreign country,then

Which of the following would be part of the nation's capital and financial account?

Absorption refers to

In a large open economy,the home country's saving and investment equations are: Sd = 200 + 700rw and Id = 300 - 200rw.The foreign country's saving and investment equations are: Sd = 50 + 300rw and Id = 75 - 50rw.In equilibrium,the world real interest rate =