In the small open economy model, starting from balanced trade, an increase in the world interest rate from a fiscal expansion abroad leads to which of the following?

Question

Answer

positive net capital outflow and a trade deficit

Answer

negative net capital outflow and a trade surplus

Answer

negative net capital outflow and a trade deficit

Answer

positive net capital outflow and a trade surplus

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In the small open economy model, starting from balanced trade, an increase in th...

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