"Germany's Bundestag approved a special defense fund worth €100bn ($110bn) to modernize its army, an initiative prompted by Russia's invasion of Ukraine" (the Economist, 4 June 2022). Use the goods & services market to predict the effects of this fiscal shock on interest rates, saving, investment, and net exports for Germany and the rest of the world in the following three cases: (a) Germany is closed; (b) Germany is a small open economy; (c) Germany is a large open economy.

"Germany's Bundestag approved a special defense fund worth €100bn ($110bn) to modernize its army, an initiative prompted by Russia's invasion of Ukraine" (the Economist, 4 June 2022). Use the goods & services market to predict the effects of this fiscal shock on interest rates, saving, investment, and net exports for Germany and the rest of the world in the following three cases: (a) Germany is closed; (b) Germany is a small open economy; (c) Germany is a large open economy.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 25CTQ: If a countrys currency is expected to appreciate in value, what would you think will be the impact...

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