Question
Use the saving-investment diagram to analyze the effects of the following on national saving, investment and the real interest rate for a closed economy: A
Use the saving-investment diagram to analyze the effects of the following on national saving, investment and the real interest rate for a closed economy: A large number of accessible oil deposits are discovered, which increases the expected future marginal product of oil rigs and pipelines. a) Assume that the the expected future marginal product of oil rigs increases marginal product of capital (in this case land). b) Assume that the the expected future marginal product of oil rigs increases future income for households (they rent the land to foreigners). c) Assume that both can happen at the same time.
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