Question:

In the open-economy model, which of the following economic variables is taken as given?

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In the open-economy model, which of the following economic variables is taken as given?

I. Real gross domestic product (GDP)

II. Real exchange rates

III. Price level

IV. Real interest rate

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3 ANSWERS


  1. real exchange rate and price


  2. I. Real gross domestic product (GDP)

    But 'Real exchange rate' is function of difference in price levels, monetary policy and market structure.

    Real interest rate - formally equalized evenly though also depends on financial market structure and business-cycle stage

  3. III. Price level

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