Flexible exchange rate system

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Reference no: EM1367200

Suppose that expectation of reducing housing values cause households to decrease their demand for new houses and the financing that accompanies it. The nation has highly mobile international capital markets and a flexible exchange rate system. Use the three sector model to solve the following problems.

11.3. Net exports will ______ and the current account will _______.

A. fall, rise
B. rise, rise
C. fall, fall
D. rise, fall

Reference no: EM1367200

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