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Suppose that the US and the European Union are the only 2 countries in the world, and their Current Accounts determine the world real interest rate.
You are told
If the two economies opened up to trade, and you were told that the world real interest rate is at 6%...
A.The US would be running a current account deficit, the EU would be running a current account surplus
B.You can't say if this is an equilibrium: not enough information
C.You would think that this can't be an equilibrium, since both economies would be running a current account deficit
D.You would think that this can't be an equilibrium, since both economies would be running a current account surplus
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