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Consider the following graph, where the equilibrium world interest rate is 4% and the domestic economy is currently running a trade surplus. What would be
Consider the following graph, where the equilibrium world interest rate is 4% and the domestic economy is currently running a trade surplus. What would be the effect of a decrease in government expenditure in the domestic economy? Use the graph to determine changes in the domestic economy investment level and in the equilibrium world interest rate. Interest Interest Rate, r Rate, r X Desired Saving and Investment iin billions of dolars
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