Question

In the small open economy in equilibrium: saving is fixed and investment is determined by the investment function and the world interest rate. investment is fixed and saving is determined by the saving function and the world interest rate. saving is fixed and investment is determined by the trade balance. investment is fixed and saving is determined by the trade balance.

Answer 1

Answer:

saving is fixed and investment is determined by the investment function and the world interest rate.

Explanation:

In a country the expansion and the development depends upon the investment and saving habits of the country. Further the investment depends upon market conditions of expansion and the world interest rate. Everything is closely linked to each other.

As for instance a country with high production, and high revenue can invest more, and if the country do not its cash to be invested in country or in foreign it might ask for high savings, alternatively, if country demands high investment then the savings might be low.

Thus, statement A is correct.