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An open economy should be able to do better (or at least not worse) than a closed economy after a natural disaster (e.g., an earthquake
An open economy should be able to do better (or at least not worse) than a closed economy after a natural disaster (e.g., an earthquake on a small island in Central America). This is because, after the event, the closed economy faces a tradeoff between investment and consumption. On the other hand, the open economy can mitigate this trade-off by running current account deficits in the short run. [MAXIMUM 250 WORDS]
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