Closed economy-small open economy and large economy

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Use algebra to derive (i.e. show how one equation follows from the other), from national income account identities, the simple classical S=I model, using three assumptions: closed economy, small open economy, and large economy. Use three graphs, one for each case, suitably labelled, to explain how the economy might react to a decrease in the autonomous demand for investment. What will happen, in each case, to interest rates, GDP, I and S, and NX?

Reference no: EM13689463

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