10. In Mankiw's model of a small open economy, domestio interest rates are set by the world's market for loanable funds, rather than by domestic saving and investment. a. What are the two simplifying assumptions in the model that disconnect domestic interest rates from domestic saving and investment? b. What is determined by domestic saving and investment in the model?

10. In Mankiw's model of a small open economy, domestio interest rates are set by the world's market for loanable funds, rather than by domestic saving and investment. a. What are the two simplifying assumptions in the model that disconnect domestic interest rates from domestic saving and investment? b. What is determined by domestic saving and investment in the model?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 12SCQ: If a country is running a government budget surplus, why is (T - G) on the left side of the...

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If a country is running a government budget surplus, why is (T - G) on the left side of the saving-investment identity?
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