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Determine the term - hot money
A large 'hot money' inflow shifts the demand curve for currency to the right, leading to exchange rate rising and to an overvalued exchange rate in terms of trading competitiveness of the country's exports. The current account of balance of payments is then about to deteriorate. If there is a shortage to start with, the deficit will grow larger. A large 'hot money' outflow will lead to opposite result.
In the long run A. price and output levels are mutually dependent. B. the level of output depends on the price level. C. the level of output is independent of the price level.
what is difference b/w dynamic and static multiplier
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