Using relevant Classical Theories, explain how this would affect her net capital outflow, real exchange rate and trade deficit in the long run.
Using relevant Classical Theories, explain how this would affect her net capital outflow, real exchange rate and trade deficit in the long run.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Suppose Country A is a small open economy with a
concern of plausible supply chain issues, business firms in Country A tend to
increase their level of inventory.
Using relevant Classical Theories, explain how this would affect her net
capital outflow, real exchange rate and trade deficit in the long run.
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