Suppose a new technology is developed that increases investment demand. Holding other factors constant, will the quantity of investment spending increase more in a closed economy or in a comparable small open economy? Explain. Assume that prices are flexible and that factors of production are fully employed in both economies. Assume that there is perfect capital mobility for the small open economy.

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The Answer of Suppose a new technology is developed that increases investment demand. Holding other factors constant, will the quantity of investment spending increase more in a closed economy or in a comparable small open economy? Explain. Assume that prices are flexible and that factors of production are fully employed in both economies. Assume that there is perfect capital mobility for the small open economy.

Suppose a New Technology Is Developed That Increases Investment Demand