For the following problem use the Three graphs we have developed that show (a) the

relationship between savings and investment and r*in the ROW, (b) the relationship

between the S and I and the r* in the SOE, and (c), the relationship between the real

exchange rate and the level of net exports in SOE,

Start from a position of trade "balance" (NX=0) for each of the following scenarios

and show the result for the trade balance, the relationship between Sand I, and the

level of NX in the SOE

.

A rise in investment demand in the SOE

A rise in investment demand in the ROW

A fall in the marginal propensity to consume in the ROW

A rise in taxes in the SOE

A war breaks out among major economies in the ROW

A sudden rise in income growth in the ROW.