Repeat Problem for a large open economy.
Problem :-
In a small open economy, how would each of the following events affect the equilibrium interest rate?
a. A natural disaster causes extensive damage to homes, bridges, and highways, leading to increased investment spending to repair the damaged infrastructure.
b. Taxes on businesses are expected to be increased in the future.
c. The World Cup soccer matches are being televised, and many people stay home to watch them, reducing consumption spending.
d. The government proposes a new tax on saving, based on the value of people's investments as of December 31 each year.