2.) The country of Albanystan (country A) forms a small open economy on its own. It has savings SA = 30 +300r and investment IA = 80 - 200r. a.) If r = 0.2, is country A a borrower or a lender? b.) Below what interest rate would country A be a borrower? The country of Bostonland (country B) decides to join and together they form a large open economy with SB = 40 + 100 and IB = 5 - 500r c.) What is the equilibrium interest rate? d. )What is CAA and CAB e.)Which country borrows and which country lend?
Only need d and e
2.) The country of Albanystan (country A) forms a small open economy on its own. It has savings SA = 30 +300r and investment IA = 80 - 200r.
a.) If r = 0.2, is country A a borrower or a lender?
b.) Below what interest rate would country A be a borrower?
The country of Bostonland (country B) decides to join and together they form a large open economy with SB = 40 + 100 and IB = 5 - 500r
c.) What is the equilibrium interest rate?
d. )What is CAA and CAB
e.)Which country borrows and which country lend?
The country of Cincinnatisland (country C) joins country B to form a large open economy, while country A forms a small open economy on its own with Sc = 50 + 200r and Ic = 25 - 400r.
f.) What is the new equilibrium interest rate?
g.) Is country A a borrower or a lender?
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