1. In each scenario below: Draw a loanable funds market diagram to show a small open economy with a balanced trade. On your diagram, show the effects from the specified scenario. Explain your diagram and describe the scenario effects on investment, net exports, and net capital outflow in the small open economy. a. A decrease in the domestic government spending G b. A tax cut abroad c. An increase in the domestic investment demand

1. In each scenario below: Draw a loanable funds market diagram to show a small open economy with a balanced trade. On your diagram, show the effects from the specified scenario. Explain your diagram and describe the scenario effects on investment, net exports, and net capital outflow in the small open economy. a. A decrease in the domestic government spending G b. A tax cut abroad c. An increase in the domestic investment demand

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 1CQQ

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