In the Mundell-Fleming model, the current account is not required to balance, neither in the short-run nor in the long-run equilibrium
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Solution 1
The Mundell-Fleming model, also known as the IS-LM-BoP model, is a macroeconomic model that explains the relationship between interest rates and the exchange rate in the short-run. It is an extension of the IS-LM model, which was developed by the economists Robert Mundell and Marcus Fleming.
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