Asked by Braeli Payne on Jun 27, 2024
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An increase in national saving reduces the interest rate and so reduces net capital outflow.
National Saving
The total amount of savings generated within a country, typically calculated as the sum of private and public savings after accounting for investments and budget deficits.
Interest Rate
The percentage of a loan amount charged by the lender to the borrower for the use of assets, usually expressed as an annual percentage rate.
Net Capital Outflow
A contrast in the buying of foreign assets by residents of a country and the acquisition of its assets by non-residents.
- Assess the implications of exchange and interest rate shifts on the macroeconomic model for open economies.
- Detail the nexus between the loanable funds market, the net capital outflow, and the foreign exchange market.
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Learning Objectives
- Assess the implications of exchange and interest rate shifts on the macroeconomic model for open economies.
- Detail the nexus between the loanable funds market, the net capital outflow, and the foreign exchange market.
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