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Under a flexible (or floating) exchange rate regime, the federal government has requested help from the Central Bank to control the price increase. The Central

Under a flexible (or floating) exchange rate regime, the federal government has requested help from the Central Bank to control the price increase. The Central Bank decides to decrease the nominal supply of money. Explain the existing effects on the Balance of Payments, the Exchange Rate, the Price Level, the Interest Rate, the Goods Market and the Level of Production, in the presence of a) Perfect Capital Mobility; b) Imperfect Capital Mobility.

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