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4. Suppose the foreign firms raise spending on real capital goods to update their manufacturing facilities. Then with a floating exchange rate and perfect capital
4. Suppose the foreign firms raise spending on real capital goods to update their manufacturing facilities. Then with a floating exchange rate and perfect capital mobility the Fleming-Mundel model predicts
a. a fall in domestic net exports. b. a a rise in both domestic GDP and consumption.
c. a fall in both domestic GDP and investment.
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