The Real Equilibrium in an Open Economy

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The Real Equilibrium in an Open Economy

In panel (a), the supply and demand for loan able funds determine t~·real interest rate. In panel (b), the interest rate determines net capital outflow, which provides the supply of dollars in the market for foreign currency exchange. In panel (c), the supply and demand for dollars in the market for foreign-currency exchange determine the real exchange rate

The Real Equilibrium in an Open Economy

The Real Equilibrium in an Open Economy

 

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The Real Equilibrium in an Open Economy