EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 23, Problem 2FCT
To determine
In what way the graph showing receding survival rate of incumbents in the long run alter when United States Government gives monitory support to firms struggling to overcome short term losses.
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Question 8 The market for loanable funds in country 1 is described by the equations I = 18 - 6r and S = 8+4r; in country 2, it is I = 18 - 4r and S = 8 + 2r. a) Find the relationships between net capital outflow and the world interest rate (rw) in the two countries. b) What is the nature of these relationships? (Are they both positive, both negative, or one positive and the other negative?) c) Calculate the world equilibrium interest rate. d) How can you reconcile the result from part b with the one from part c?
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