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[sofia959]

Consider a small open economy facing simultaneous shocks in the form of an increase in world interest rates and a decline in global demand for its main export. Analyze the potential short-term and long-term effects on key economic indicators such as exchange rates, inflation, unemployment, and economic growth. Discuss the policy options available to the government to mitigate these effects and highlight the trade-offs involved in pursuing different strategies. Additionally, address the implications of these shocks on income distribution within the country.

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[nitinkumar012]

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