Consider a small open economy and suppose the global interest rate (r*) is 8%, the investment amount is governed by I(r) = 15M – 0.5r, and domestic savings are 12M. Sketch the supply and demand curve for S,I,r* and illustrate net exports or imports. Find the numeric value of net exports.

Consider a small open economy and suppose the global interest rate (r) is 8%, the investment amount is governed by I(r) = 15M – 0.5r, and domestic savings are 12M. Sketch the supply and demand curve for S,I,r and illustrate net exports or imports. Find the numeric value of net exports.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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