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Q. What do you mean by Capital Flows?
With free capital flows, this is a very unreasonable assumption. If we domestic interest rate increase against the foreign interest rates, capital will flow into our country that would drive down the domestic interest rate again.
Most reasonable models in that domestic interest rate is affected by foreign interest rates are more complicated. To understand such models, you should first understand models where this complication doesn't arise. Additionally predictions from models where domestic interest rate isn't affected by foreign interest rates are fairly similar to more realistic models which allows for capital flows.
If the AD excess is $300 billion and the MPC is 0.8 how much fiscal restraint is required? What does the "debt held by the public" mean?
explain and illustrate how the Lm curve is derived.
In a Poisson distribution U=4. A) What is the probability that X=2? B) What is the probability that X is 2?
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