n open economy is characterized by the existence of trade activities and international capital flows in a significant amount relative to GDP. a) If it is assumed that a country is in a market clearing condition: An open economy is characterized by the existence of trade activities and international capital flows in a significant amount relative to GDP. a) If it is assumed that a country is in a market clearing condition: ? = ? + ? + ? + ? − ? where Y is the amount of output, C is household consumption, I is the level of investment, G is government spending, X is the level of exports and M is the level of imports; show through mathematical equations the impact of a trade surplus on a country's net international capital flows! What are the consequences for the global economy if there is a continuous imbalance in the trade surplus? b) What is the impact of the large open economy's fiscal expansion on the trade balance performance of the small open economy? Draw the curve and complete it with the relevant assumptions!
An open economy is characterized by the existence of trade activities and international capital flows in a significant amount relative to GDP.
a) If it is assumed that a country is in a market clearing condition:
An open economy is characterized by the existence of trade activities and international capital flows in a significant amount relative to GDP.
a) If it is assumed that a country is in a market clearing condition:
? = ? + ? + ? + ? − ?
where Y is the amount of output, C is household consumption, I is the level of investment, G is government spending, X is the level of exports and M is the level of imports; show through mathematical equations the impact of a trade surplus on a country's net international capital flows! What are the consequences for the global economy if there is a continuous imbalance in the trade surplus?
b) What is the impact of the large open economy's fiscal expansion on the trade balance performance of the small open economy? Draw the curve and complete it with the relevant assumptions!
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