A small open economy has a current account of zero. A fall in its investment demand balance causes O no change in the current account. O no change in the capital account.

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter19: International Finance And The Foreign Exchange Market
Section: Chapter Questions
Problem 11CQ
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Answer neatly with proper explanation of the each option given

A small open economy has a current account
balance of zero. A fall in its investment demand
causes
O no change in the current account.
O no change in the capital account.
Onet lending to the rest of the world.
Onet borrowing from the rest of the world.
Transcribed Image Text:A small open economy has a current account balance of zero. A fall in its investment demand causes O no change in the current account. O no change in the capital account. Onet lending to the rest of the world. Onet borrowing from the rest of the world.
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