Question

In a large open​ economy, an increase in desired national saving causes the world real interest rate to​ _____, and an increase in desired investment causes the world real interest rate to​ _____.

Answer 1

Answer:

Decline, increase

Explanation:

In a large open​ economy, an increase in desired national saving causes the world real interest rate to​ decline, and an increase in desired investment causes the world real interest rate to​ increase.

When, savings increases, there will be reduction in interest rates while on the other hand an increase in investment will put pressure on loan facilities resulting in an increase in interest rates.

Answer 2

Answer:

Decline; increase

Explanation:

when national saving of large economy is increases its curve shift rightward and due to which its current account increases and equilibrium get disturbed, to restore equilibrium again world interest rate must decline. On the contrary to this when investment of large economy increases it effect and reduce current account due to which equilibrium get disturbed and than   world interest rate inclined to restore equilibrium.