Suppose that Germans decide to increase their saving. a. If the elasticity of German net capital outflow
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Suppose that Germans decide to increase their saving.
a. If the elasticity of German 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 German domestic investment?
b. If the elasticity of German 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 German real exchange rate?
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