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The diagram to the right shows equilibrium in the goodsmarket of a small open economy at point A. Assume thatthis small open economy is under capital controls, meaningdomestic residents are prohibited from borrowing andlending from the world capital market.1.) Using the line drawing tool, show the world real interestrate below the closed-economy domestic rate. Properlylabel this line.2.) Using the point drawing tool, identify the amount ofdesired saving at this world real interest rate. Label th
The diagram to the right shows equilibrium in the goodsmarket of …
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