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Assume a country faces a large government budget deficit and large current account deficit. Investors become concerned that the government will default on their foreign
Assume a country faces a large government budget deficit and large current account deficit. Investors become concerned that the government will default on their foreign sovereign debt. As a result, they begin a large sell-off of their government bonds and take their funds out of the country.
Using the graph template, illustrate this chain of events.
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