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This document discusses how international trade and capital flows adjust in response to changes in inflation and interest rates when exchange rates are held constant. It explains that if inflation increases in one country, its exports will increase and imports to that country will decrease due to a change in demand. It also notes that if interest rates increase in one country, capital will flow out of countries with lower rates and into the country with higher rates. The document then provides an example an

Author

josephblink

Language

EN