In a small open economy,
Desired national saving, Sd = $10 billion + ($100 billion)rw;
Desired investment, ld = $15 billion - ($100 billion)rw;
Output, Y = $50 billion;
Government purchases, G = $10 billion;
World real interest rate, rw =3%.
a. Find the economy's national saving, investment, current account surplus, net exports, desired consumption, and absorption.
b. Owing to a technological innovation, the country's desired investment rises by $2 billion at each level of the world real interest rate. Repeat part (a).