Small open economy with fixed exchange rate
Course:- Business Economics
Reference No.:- EM13975074

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Small Open Economy with a Fixed Exchange Rate

a) Suppose the economy of Neutrino has reached its long run equilibrium (i.e. full employment). Use the Mundell-Fleming model to explain what would happen to aggregate income, the real exchange rate. the nominal exchange rate, the real interest rate in this small open economy with a fixed exchange rate if there is an increase in investment demand (i.e. the investment demand shifts up).

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