Problem
1. Considering the world as two large open economies, a domestic economy and the rest of the world, what condition is required for goods market equilibrium? How is this condition achieved?
2. How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world, investment in both economies, and the world real interest rate?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.