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Consider two countries, China and Pakistan and assume that exchange rate of yuan/rupee is fixed. a. Explain the effects of a decrease in Chinas national

Consider two countries, China and Pakistan and assume that exchange rate of yuan/rupee is fixed.

a. Explain the effects of a decrease in Chinas national income (Y) on the CA and KA, OSB, ORT, and overall BOP of both China and Pakistan. b. Explain the process of adjustment to a new equilibrium in Chinas Money Market.

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