Assume a sudden collapse in the stock exchange of an economy is expected to reduce the future profitability of the firms of the economy.
Construct loanable funds market in a closed economy & discuss the effect of it on the rate of interest & investment. Construct loanable funds market in the context of an open economy by assuming that the home country is a small open economy.
Discuss the effect of an enhancing in the govt. budget deficit in the home country.
In this context recognize the twin deficit.