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Comment on the effect of an increase in autonomous consumption in on the real interest rate, desired saving and investment and net exports for a)
Comment on the effect of an increase in autonomous consumption in on the real interest rate, desired saving and investment and net exports for a) large economy B) small economy when there is a simultaneous increase in autonomous investment in the rest of the world.
Assume two separate scenarios:
a) There is an initial net export surplus.
b) There is an initial net export deficit.
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