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Consider a small open economy for which national saving (NS) and domestic investment (l) can be represented by the following equations. NS= 20 + r
Consider a small open economy for which national saving (NS) and domestic investment (l) can be represented by the following equations. NS= 20 + r 1=40 - 3 r If the world real interest rate is 10% and there are no restrictions on international borrowing and lending, which of the following must be true: (Use the percentage form of the interest rate in the equations) a. Investment is equal to 30 b. The country runs a trade surplus equal to 20 c. None of the other answers are correct. d. The country runs a trade deficit equal to 20 e. National savings is equal to 10
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