Use the graphs that we have developed that show (a) the relationship between savings and investment and r*in the ROW (rest of world), (b) the relationship between the S and I and the r* in the SOE (small open economy), and (c), the relationship between the real exchange rate and the level of net exports in SOE

Start from a position of trade "balance" (NX=0) for each of the following scenarios and show the result for the trade balance, the relationship between Sand I, and the level of NX in the SOE.

-A rise in investment demand in the SOE

-A rise in investment demand in the ROW

-A fall in the marginal propensity to consume in the ROW

-A rise in taxes in the SOE

-A war breaks out among major economies in the ROW

-A sudden rise in income growth in the ROW