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1)Explain why, in a small open economy, (a) national saving does not have to equal investment, and (b) output does not have to equal absorption
1)Explain why, in a small open economy, (a) national saving does not have to equal investment, and (b) output does not have to equal absorption.
- In a world with two large open economies, what determines the world real interest rate? What relationship between the current accounts of the two countries is satisfied when the world real interest rate is at its equilibrium value?
- How does an increase in desired national saving in a large open economy affect the world real interest rate? How does an increase in desired investment affect it? Why do changes in desired
4. What are the twin deficits? What is the connection between them?
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