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What do you understand by the term “closed economy”? For a closed economy show,
National savings = National Investment
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- What is investment? How is it related to nationalsaving in a closed economy?What is the saving and investment equation? If national saving declines what will happen to domestic investment and net foreign investment?In an open economy the national income identity shows that: Where S stands for national savings, I for investment spending and NX for the trade balance. Carefully state this identity in words and explain why it is expected to hold.
- In an open economy, if the level of net exports rises, it must be the case thata) there is an increase in saving.b) there is an increase in investment.c) the value of saving less investment must fall.d) none of the above. Why the correct answer is D?What are the assumptions in the small open economy.vs closed or largeopen? What would be an example country today?In an open economy, national saving equalsdomestic investmenta. plus the government’s budget deficit.b. minus the net exports of goods and services.c. plus the net outflow of capital.d. minus foreign portfolio investment
- What is Foreign Direct Investment (FDI) all about?In a closed economy, if Y and T remained the same, but G rose, and C fell but by less than the rise in G, what would happen to public and national saving? a. public and national saving would rise b. public saving would fall and national saving would rise c. public saving would rise and national saving would fall d. public and national saving would fallConsider a small open economy that takes the world real interest rate as given. Suppose the world real interest rate is less than the country’s autarky real interest rate. Which of the following is TRUE? a. Domestic saving exceeds domestic investment b. There is capital outflow c. There is excess demand for capital d. None of the other options
- In a small open economy, if the budget deficit increases, then which of the following is likely to be accurate? a. If private saving and domestic investment stay the same, then net exports increase. b. If private saving stays the same and net exports increase, then domestic investment decreases. c. If private saving decreases and domestic investment stays the same, then net exports increase. d. If private saving increases and net exports decrease, then domestic investment decreases.In an open economy, it is impossible to have national saving equal to domestic investment.Answer true, false, or uncertain. Please briefly explain your answer.describe in detail regarding Should the USA support a global economy or a closed economy?