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[15] 4. The exchange rate is flexible. Using the two-sector model, explain how an exogenous increase in the marginal product of labour in the non-traded
[15] 4. The exchange rate is flexible. Using the two-sector model, explain how an exogenous increase in the marginal product of labour in the non-traded sector affects the different prices, wages, and the exchange rate in the long run. Assume that the central bank is holding the price level fixed. Adopt the standard assumptions. Hold the other exogenous variables fixed
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