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Given a small open economy where the world real interest rate is higher than the equilibrium domestic real interest rate, an increase in the budget

Given a small open economy where the world real interest rate is higher than the

equilibrium domestic real interest rate, an increase in the budget deficit would lead to

a) a decrease in net capital inflows.

b) an increase in net capital outflows.

c) no change to net capital flows.

d) a decrease in net capital outflows.

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