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With the aid of the Mundell-Fleming diagrams, predict what would happen to aggregate income, the exchange rate, and the trade balance under in response an

With the aid of the Mundell-Fleming diagrams, predict what would happen to aggregate income, the exchange rate, and the trade balance under in response an increase in the risk premium for:

a) a small open economy with a fixed exchange rate.

b) a small open economy with a floating exchange rate.

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