8. Suppose that real interest rates increase across Europe. Explain how this development will affect U.S. net
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8. Suppose that real interest rates increase across Europe.
Explain how this development will affect U.S. net foreign investment. Then explain how it will affect U.S.
net exports by using a formula from the chapter and by using a diagram. What will happen to the U.S. real interest rate and real exchange rate?
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