Current account balance desired consumption

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Reference no: EM131968377

1.) In a small open economy,

NS? = $20 billion + $160 billion * rw

Id = $15 billion - $200 billion *rw

Y=$60 billion

G= $10 billion

r= .05

a) Find the country's national saving, investment spending, current account balance desired consumption, and absorption.

b) Owing to a change, the country's desired saving falls by $10 billion at each level of the world interest rate. Repeat part (a) with this information.

c) Start with the information as given in part (a), now let rw = 0.4, re-compute the values for the country's national saving, investment spending, current account balance, desired consumption, and absorption.

Reference no: EM131968377

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