Use Figure 5.1 below to answer the next three questions:realinterestrateA Ba. a foreign trade deficit equal to A-B would result.b.the rate of government saving would decrease.c. domestic interest rates would increase.S+T-G17. If the open economy in Figure 5.1 experienced a decrease in taxes so that the S + T - G line nowpassed through point A:d. the foreign exchange rate would appreciate.e. all of the above.I,S,X

The Equilibrium interest rate is determined where the investment and saving are equal. The saving…

Answered: Use Figure 5.1 below to answer the next…

Use Figure 5.1 below to answer the next three questions: real interest rate A B C S+T-G I I,S,X 17. If the open economy in Figure 5.1 experienced a decrease in taxes so that the S + T - G line now

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a hypothetical open economy. The following table presents data on the relationship between various real interest rates and national saving, domestic investment, and net capital outflow in this economy, where the currency is the U.S. dollar. Assume that the economy is currently experiencing a balanced government budget. Real Interest Rate National Saving Domestic Investment Net Capital Outflow (Percent) (Billions of dollars) (Billions of dollars) (Billions of dollars) 7 60 25 -10 6 55 30 -5 5 50 35 0 4 45 40 5 3 40 45 10 2 35 50 15 Given the information in the preceding table, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. On the following graph, plot the relationship between the real…
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We can think of an increase in government transfer payments as a- a decrease in G b- an increase in G c- an increase in T d- a decrease in T
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