1。In a small open economy,
　　1）if government increase its spending, what is the effect on NCO?
　　2）what if tax rate of physical capital investment rise?
　　
　　2.According to the classical theory of inflation, explain the adjustment process of new equilibrium if the prevailing nominal interest rate has an increase
　　
　　
　　3。In an open economy, if there is a sudden increase in net capital outflow:
　　a) Is it impossible that the country’s net exports is constant? Why?
　　b)Under the same condition of the market for loanable funds, what’s the key determinant of the magnitude of the change in net exports?
　　
　　
　　4。Explain how the following factors shift the AD curve (if there is an increase in each of these factors) by using the framework of IS-LM:
　　• Consumption
　　• Investment
　　• Government Purchases
　　• Net Exports
　　
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