Essay
A large open economy has desired national saving of Sd = 20 + 200 rw and desired national investment of Id = 30 - 200 rw. The foreign economy has desired national saving of Sd = 40 + 100 rw and desired national investment of IdFor = 75 - 400 rw.
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 + 200 rw. Calculate the equilibrium values of rw CA, CAFor, S, I, SFor, and IFor.v
c. Suppose with Sd back to Sd = 20 + 200 rw as in part a, that Id rises by 45, to Id = 75 - 200 rw. Calculate the equilibrium values of rw, CA, CAFor, S, I, SFor and IFor.
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a. In equilibrium, Sd + SdFor = Id + IdFor, so tha...View Answer
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