Author Question: In a large open economy ________. A) the effect of shifts in saving and investment on the trade ... (Read 43 times)

WhattoUnderstand · **on:** Jun 30, 2018

In a large open economy ________.

A) the effect of shifts in saving and investment on the trade balance are in the same direction as in a closed economy
B) the effect of shifts in saving and investment on net capital flows are in the same direction as in a closed economy
C) the effect of shifts in saving and investment on the domestic real interest rate and the actual levels of saving and investment are in the same direction as in a closed economy
D) all of the above
E) none of the above

Question 2

The liquidity preference function shows that as ________.

A) real income decreases, so does the demand for real money balances
B) the nominal interest rate increases, so does the demand for real money balances
C) real income decreases, so does the real interest rate
D) all of the above
E) none of the above