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Suppose the US raises taxes. Look at the scenario from the perspective of a small open economy initially running a trade surplus. a) Use the
Suppose the US raises taxes. Look at the scenario from the perspective of a small open economy initially running a trade surplus. a) Use the foreign exchange market to show the effects of the new US policy on S, I, r, NX as well as the exchange rate in the small open economy. b) Is this external policy beneficial to the small open economy? Why or why not
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