Draw a diagram for Saving and Investment in a small open economy. Assume the world real interest rate is above the closed equilibrium interest rate for the country you drew. Is this country a foreign lender or foreign borrower? Explain with the intuition of the saving and investment functions

Draw a diagram for Saving and Investment in a small open economy. Assume the world real interest rate is above the closed equilibrium interest rate for the country you drew. Is this country a foreign lender or foreign borrower? Explain with the intuition of the saving and investment functions

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter7: Economic Growth: Theory And Policy

Section: Chapter Questions

Problem 3DQ

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Question

Draw a diagram for Saving and Investment in a small open economy.
Assume the world real interest rate is above the closed equilibrium interest
rate for the country you drew. Is this country a foreign lender or foreign
borrower? Explain with the intuition of the saving and investment functions

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