real interest rate A B C S+T-G I I,S,X 18. Suppose, everything else is unchanged, the world interest rates in Figure 5.1 increase. What wou be the reaction of the open economy in the diagram? a. Net domestic saving would decrease. b. The foreign exchange rate would appreciate. c. Net exports would decrease. d. Foreign investment abroad would decrease. e. Neither the investment curve nor the domestic savings curve would shift.

real interest rate A B C S+T-G I I,S,X 18. Suppose, everything else is unchanged, the world interest rates in Figure 5.1 increase. What wou be the reaction of the open economy in the diagram? a. Net domestic saving would decrease. b. The foreign exchange rate would appreciate. c. Net exports would decrease. d. Foreign investment abroad would decrease. e. Neither the investment curve nor the domestic savings curve would shift.

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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