Essay
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.
Correct Answer:

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(a)In equilibrium,Sd +
= Id +
so that 60...View Answer
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Correct Answer:
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