Suppose an earthquake happened in a foreign country which is large enough to make significant changes...

Suppose an earthquake happened in a foreign country which is large enough to make significant changes in world financial markets. This earthquake led to significant amount of casualties in the country without much effect on the capital stock. What should be the effect of this on price level, real exchange rate, and nominal exchange rate of our small domestic economy in long run and from long run to very-long run? Explain in detail by showing the changes in the relevant markets.

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Rahul Sunny answered 1 year ago

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