Multiple Choice
In the two-period SOE model with production, suppose that the real interest rate if there were no trade is greater than the world real interest rate. If the economy is initially closed, and then becomes open,
A) net exports will be positive.
B) output will increase.
C) net exports will be negative.
D) investment will fall.
E) government spending will rise.
Correct Answer:
Verified
Correct Answer:
Verified
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