SHORT-ANSWER QUESTIONS

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SYMBOLS: Y is output / income /expenditure / real GDP y is output per worker or output per effective worker K is capital k is capital per worker or capital per effective worker - L is labour - Cis consumption c is consumption per worker or consumption per effective worker I is investment i is investment per worker or investment per effective worker - G is total government expenditures T is total taxes S is national savings s is the savings rate - 5 is the depreciation rate - n is the population growth rate - g is the rate of technological progress MPK is the marginal product of capital r* is the world real interest rate r is the closed-economy real interest rate 4. Consider the (Small) Open-Economy Loanable Funds Model. i. Identify using a symbol and name each exogenous factor in the model. ii. Identify using a symbol and name each endogenous factor in the model. iii. Name and describe supply in this model? iv. Name and describe demand in this model? V. Describe how and why the rate of interest (r) differs between this model and the Closed- Economy Loanable Funds Model? SYMBOLS: Y is output / income /expenditure / real GDP y is output per worker or output per effective worker K is capital k is capital per worker or capital per effective worker - L is labour - Cis consumption c is consumption per worker or consumption per effective worker I is investment i is investment per worker or investment per effective worker - G is total government expenditures T is total taxes S is national savings s is the savings rate - 5 is the depreciation rate - n is the population growth rate - g is the rate of technological progress MPK is the marginal product of capital r* is the world real interest rate r is the closed-economy real interest rate 4. Consider the (Small) Open-Economy Loanable Funds Model. i. Identify using a symbol and name each exogenous factor in the model. ii. Identify using a symbol and name each endogenous factor in the model. iii. Name and describe supply in this model? iv. Name and describe demand in this model? V. Describe how and why the rate of interest (r) differs between this model and the Closed- Economy Loanable Funds Model