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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Suppose that Americans decide to increase their saving.

a. If the elasticity of U.S. net capital outflow with respect to the real interest rate is very high, will this increase in private saving have a large or small effect on U.S. domestic investment?

b. If the elasticity of U.S. exports with respect to the real exchange rate is very low, will this increase in private saving have a large or small effect on the U.S. real exchange rate?

Subpart (a):

To determine

The impact of increased savings.

Explanation

Savings is the excess disposable income left after the consumption expenditure of an individual. The savings kept by the people in an economy are known as the private savings and the savings by the government is known as the public savings. The national savings is the summation of both private and the public savings of an economy.

It is given that the individuals decide to increase their savings...

Subpart (b):

To determine

The impact of increased savings.

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