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open economy

Consider the open economy displayed in the figure below. Firms in this nation do import raw materials and other productive inputs from​ abroad, and foreign residents purchase many of the​ nation’s goods and services.

a. Using the three point curved line drawing tool​, determine the most likely​ short-run effect on this​ nation’s economy if there is a significant raw materials price inflation in other nations around the world. Label this line​ ‘Shock’.

Carefully follow the instructions​ above, and only draw the required objects.  

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