Suppose in an open economy, two countriesBrazil and Argentinahave a fixed exchange rate (under Bretton Woods Agreement).

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Suppose in an open economy, two countries—Brazil and Argentina—have a fixed exchange rate (under Bretton Woods Agreement). If the inflation rate in Brazil is higher than Argentina’s, what is the likely impact of the higher inflation on the trade balance between two countries?

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International Finance: Theory And Policy

ISBN: 9781292065199

10th Edition

Authors: Krugman, Paul R.; Melitz, Marc J.; Obstfeld, Maurice

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