Use the model from chapter 5 of the textbook to predict how each of the followin

Question

Use the model from chapter 5 of the textbook to predict how each of the following
shocks would affect national saving (S), investment (I), the trade balance (NX), and the
real exchange rate (?) in a small, open economy with perfect capital mobility, all else
equal. For each shock, be sure to clearly state a prediction for all four variables, illustrate
your predictions with the relevant diagrams, and explain your predictions intuitively in
words.
a. Technological progress increases domestic total factor productivity.
b. The world

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