Question
a) Illustrate the effects of a temporary adverse shock that decreases saving in the rest of the world on the saving and investment graph for
a) Illustrate the effects of a temporary adverse shock that decreases saving in the rest of the world on the saving and investment graph for the U.S., assuming that U.S. is a large, open economy that before the shock was running a CA deficit.
b) What are the effects of this shock on the real interest rate, savings, investment, and current account in the U.S.?
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Principles of Economics
Authors: Fred M. Gottheil
7th edition
978-1133962069, 9781285064444, 1133962068, 1285064445, 978-1285064437
