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Macro Economics with Michael.
IS-LM Model — Key Concepts (Perfect Mobility): True or False? #Shorts
True or False? Test yourself on the IS-LM / Mundell-Fleming model of a small open economy. Statement: Under perfect capital mobility, in equilibrium the domestic interest rate equals the world rate under both regimes — floating and fixed. Answer: TRUE Perfect mobility arbitrages away any rate gap instantly, so r equals r-star in both. Only ...
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