Question: Suppose that some foreign countries begin to subsidize investment by instituting an investment tax credit. a. What happens to world investment demand as a function

Suppose that some foreign countries begin to subsidize investment by instituting an investment tax credit.
a. What happens to world investment demand as a function of the world interest rate?
b. What happens to the world interest rate?
c. What happens to investment in our small open economy?
d. What happens to our trade balance?
e. What happens to our real exchange rate?

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