Two small open economies fixed and flex can be described by, Ask an Expert

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Two small open economies, Fixed and Flex, can be described by the Mundell-Fleming model. The countries are otherwise identical except that Fixed maintains a fixed exchange rate, while Flex maintains a flexible exchange-rate regime. The governments of both countries increase spending by the same amount. Compare what happens in the two countries to:

a) the exchange rate

b) equilibrium output

c) net exports

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91406928

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