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In: Economics

] Faced with high levels of government debt, European Union economies have been reducing government expenditure...

] Faced with high levels of government debt, European Union economies have been reducing government expenditure and/or raising taxes. What are the effects of these “austerity policies” on EU national saving, S? For each of the following three cases, derive the expected effects on EU and US interest rates, saving, investment, and net exports: (a) EU is a closed economy; (b) EU is a small open economy; (c) the world consists of two large economies: the EU and the US.

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Rahul Sunny answered 1 year ago
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