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Monetary base in the context of the three-sector-model

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Assume that foreign capital flows from a nation increase due to political uncertainty and increased risk. If that nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the real exchange rate and monetary base in the context of the Three-Sector-Model? Assume the nominal exchange rate is stated as: (Domestic currency per foreign currency)

Reference no: EM132421862

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