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You are a minister of Pancraziland, a small-open economy country. During a cabinet meeting another minister says: We have a problem. It seems that free

You are a minister of Pancraziland, a small-open economy country. During a cabinet meeting another minister says: "We have a problem. It seems that free capital mobility is not working anymore. In fact, our real interest rate is 5 percent, while the real interest rate of our neighbour country is 10 percent. What do you think?" Provide a clear and complete argument about whether you agree or do not agree with that statement

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