3. In a small open economy, desired national saving, Sd = +10 billion + (+100 billion)rw; desired investment, I d = +15 billion - (+100 billion)rw; output, Y = +50 billion; government purchases, G = +10 billion; world real interest rate, rw = 0.03.

a. Find the economy’s national saving, investment, current account surplus, net exports, desired consumption, and absorption.

b. Owing to a technological innovation that increases future productivity, the country’s desired investment rises by $2 billion at each level of the world real interest rate. Repeat Part

(a) with this new information.