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

Question

Quizplus · Accepted Answer

In a large open economy, the direction of the shifts in saving and investment on the trade balance are the same as for a small open economy, as both are influenced by changes in national saving and investment. However, the effects on interest rates and capital flows differ due to the economy's size and influence on global markets.

In a Large Open Economy ________