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Homework answers / question archive / Savings increase in the rest of the world
Savings increase in the rest of the world. Explain how this affects the world interest rate, American savings, investment, net exports and real exchange rate?
Savings in Rest of world rises, consumption declines, world interest rate decreases, world GDP declines, exports of US decreases, trade deficit, exchange rate depreciates, US GDP decreases, US savings decreases, US investment decreases, US interest rate decreases, exchange rate decreases, world inflation decreases, US inflation too decreases, real exchange rate rises or declines depending on relative increase of US inflation.