Which of the following statements is true for the small open economy? a.Saving is not always equal to investment b.Saving is always greater than investment c.Saving is always equal to investment d.Saving is always less than investment Clear my choice
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Which of the following statements is true for the small open economy?
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- 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 is the difference between a closed and open economy. Define in a well manner.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.
- Differentiate between a closed economy and an open economyDraw a neat and a labelled diagram showing circular flow of income in an open economy.In a small open economy, if domestic investment equals $70 billion, domestic private saving equals $40 billion, and government saving equals $30 billion, then the trade balance is: a. -$30 billion b. $0 billion c. $30 billion d. $40 billion
- How will you differentiate an open economy from a closed economy? Explain with the help of an example.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 investmentDraw a diagram for Saving and Investment in a small open economy.Assume the world real interest rate is above the closed equilibrium interestrate for the country you drew. Is this country a foreign lender or foreignborrower? Explain with the intuition of the saving and investment functions
- Multiple choice question In a small economy the difference between saving and investment determines: a. real exchange rate.b. net exports and net capital outflow.c. taxes.d. government expenditures.In a small open economy, an increase in government spending implies: O a) an increase in S-l(r *); b) b) a decrease in S-l(r*); Oc) no change in S-1(r"); O d) a decrease in r *;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 fall