CL4 ECO 3203 - Illustrate this change graphically on a new...

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Classwork #4 Consider a small open economy: National Saving: S N = 20+100r Investment: I = 30-100r Potential Output: Y* = 70 World Interest Rate: r* = 0.04 G = 12 and T = 8 Find values for net exports and consumption. Illustrate your results on a saving-investment diagram. Label the levels of national saving and investment. Suppose that in the small economy, there is an increase in investment.
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Unformatted text preview: Illustrate this change graphically, on a new graph, and indicate what happens to the following variables in the new long run equilibrium (the choices are up, down, or stay the same): National saving _________ Investment _________ Consumption _________ Real interest rate _________ Value of the home currency _________ Net capital inflow _________ Net exports _________...
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