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9. Problems and Applications Q9 Suppose that Americans decide to increase their saving. As a result, the real interest rate willfall , and U.S. net
9. Problems and Applications Q9 Suppose that Americans decide to increase their saving. As a result, the real interest rate willfall , and U.S. net capital outflow willdecrease . If the elasticity of U.S. net capital outflow with respect to the real interest rate is very low, this increase in private saving will have alarge effect on U.S. domestic investment. If the elasticity of U.S. exports with respect to the real exchange rate is very high, this increase in private saving will have asmall effect on the U.S. real exchange rate
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