Question: QUESTION 4 [20 marks]. Using proper equations, complete the following tasks: a. Prove and explain that the multiplier effect is smaller in an open economy

QUESTION 4 [20 marks].

Using proper equations, complete the following tasks: a. Prove and explain that the multiplier effect is smaller in an open economy compared to a closed economy.

b. Prove and explain that the current account balance should be equal to the difference between total savings and investment.

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