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4 points each answer (2 for the explanation and 2 for the graphs) For...

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Finance

4 points each answer (2 for the explanation and 2 for the graphs)

For the following problem use the Three graphs we have developed that show (a) the relationship between savings and investment and r*in the ROW, (b) the relationship between the S and I and the r* in the SOE, and (c), the relationship between the real exchange rate and the level of net exports in SOE,

Start from a position of trade balance (NX=0) for each of the following scenarios and show the result for the trade balance, the relationship between Sand I, and the level of NX in the SOE.

A rise in investment demand in the SOE

A rise in investment demand in the ROW

A fall in the marginal propensity to consume in the ROW

A rise in taxes in the SOE

A war breaks out among major economies in the ROW

A sudden rise in income growth in the ROW

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