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The diagram to the right shows equilibrium in the goods market of a O small open economy at point A. Assume that this small open
The diagram to the right shows equilibrium in the goods market of a O small open economy at point A. Assume that this small open 20- economy is under capital controls, meaning domestic residents are 18- prohibited from borrowing and lending from the world capital market. 0 16- 1.) Using the line drawing tool, show the world real interest rate below the closed-economy domestic rate. Properly label this line. 14- 2.) Using the point drawing tool, identify the amount of desired 12- saving at this world real interest rate. Label this point 'B'. Real interest rate, r 10- A 3.) Using the point drawing tool, identify the amount of investment at this world real interest rate. Label this point 'C'. 8- Carefully follow the instructions above, and only draw the required objects. 4- This situation is one with 2
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