Question:
Consider an economy with perfect capital mobility, fixed price level and flexible exchange rate. What will be the effect of a rise in foreign interest rate on output?
Consider an economy with perfect capital mobility, fixed price level and flexible exchange rate. What will be the effect of a rise in foreign interest rate on output?
Updated On: Mar 11, 2024
- rise
- decline
- no change
- falls at a decreasing rate
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The Correct Option is A
Solution and Explanation
The correct option is(A): rise
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