Question:
Consider an economy with perfect capital mobility, fixed price level and fixed exchange rate. What will be the effect of a rise in foreign interest rate on output of this economy?
Consider an economy with perfect capital mobility, fixed price level and fixed exchange rate. What will be the effect of a rise in foreign interest rate on output of this economy?
Updated On: Mar 12, 2024
- Rise
- Decline
- No change
- Can't say
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The Correct Option is B
Solution and Explanation
The correct answer is (B) : Decline.
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