(Solved): What is the difference between nominal and real economic variables, give relevant examples Why do e ...

What is the difference between nominal and real economic variables, give relevant examples Why do economists tend to concentrate on changes in real magnitudes? Question 2 Discus the challenges of national income accounting in developing countries? Recommend solutions. Question 3 Consider a small open economy in equilibrium with a zero current account balance. What happens to national saving, investment, and the current account balance in equilibrium if (a) future income rises? (b) business taxes rise? (c) government expenditures decline temporarily? (d) the future marginal product of capital rises? Question 4 Use a saving - investment diagram to explain what happens to saving, investment, and the real interest rate in cach of the following scenarios in a closed economy. (a) In an agricultural economy, great weather this year promises a bumper crop next year, leading citizens to expect higher income next year. (b) Government regulations going into effect next year will reduce the marginal product of capital (c) The government increases lump-sum taxes on citizens.