Open economy under flexible exchange rate system
Problem: Examine the effects of a change in the money supply in an open economy under a flexible exchange rate system. How are your conclusion affected by the adoption of a fixed exchange rate?
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Examine the effects of a change in the money supply in an open economy under a flexible exchange rate system. How are your conclusion affected by the adoption of a fixed exchange rate?
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What are the implications of operating in the short run and the long run? As your business grows, how must you consider the issues regarding diminishing marginal returns and economies of scale?
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