In a small open economy, describe what happens when an increase in wealth causes national saving to decline. Explain the impact on the real interest rate, saving, investment, net exports, and absorption in equilibrium
What will be an ideal response?
With the saving curve shifting to the left in a small open economy, in equilibrium, saving declines, but investment and the real interest rate are unchanged. Since NX = S - I, NX declines. Since absorption equals output minus net exports, and net exports decline, then absorption increases.
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How does the owner of a sole proprietorship relate to the business?
A) The assets of the owner are considered separate from the assets of the business. B) The owner and the business are not separate legal entities. C) The owner and the business are separate legal entities. D) None of these describe the legal relationship of the owner to the business.
Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold. Other things equal,
a. pollution would not be affected b. the price of pollution rights would rise, and the amount of pollution would decrease c. the price of pollution rights would fall, and the amount of pollution would decrease d. the price of pollution rights would fall, and the amount of pollution would increase e. the price of pollution rights would rise, and the amount of pollution would increase