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(25 points) Consider the following open economy version of the IS-BP model: Goods Market: Y =C+lo+Go+X -M C = C ( Y - T), T

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(25 points) Consider the following open economy version of the IS-BP model: Goods Market: Y =C+lo+Go+X -M C = C ( Y - T), T = T(Y) where Go and Io are exogenous, X and M denote exports and imports respectively, and T is a function of Y alone. Assume 0 0, My > 1, ME

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