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5: The Portfolio Balance Model assumes a country has foreign denominated assets, but no foreign denominated liabilities. How do you think the implications would change
5: The Portfolio Balance Model assumes a country has foreign denominated assets, but no foreign denominated liabilities. How do you think the implications would change if the country had foreign denominated liabilities, but no foreign denominated assets?
6: Return to question 5. What implication may this have for the effect of portfolio rebalancing on exchange rate movements for countries with positive and negative net international investment positions?
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