9. The chief economic adviser of a small open economy makes the following announcement: We have good

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9. The chief economic adviser of a small open economy makes the following announcement: “We have good news and bad news. The good news is that we have just had a temporary beneficial productivity shock that will increase output; the bad news is that the increase in output and income will lead domestic consumers to buy more imported goods, and our current account balance will fall.” Analyze this statement, taking as given that a beneficial productivity shock has indeed occurred,

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