Consider a country in a regime with flexible exchange rates. Keeping the domestic interest rate constant, an increase in the foreign real interest rate is likely to generate An appreciation of the domestic currency. A long-run increase in net exports. An inflow of capital (more investment in the country from foreigners). Domestic residents make less investments abroad.

Consider a country in a regime with flexible exchange rates. Keeping the domestic interest rate constant, an increase in the foreign real interest rate is likely to generate An appreciation of the domestic currency. A long-run increase in net exports. An inflow of capital (more investment in the country from foreigners). Domestic residents make less investments abroad.

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Open-Economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 3QCMC

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