Effects of Cross-Border Conflicts. Suppose that due to cross-border conflicts in an economy, domestic firms export less in order to meet the higher domestic consumption of goods. At the same time, the...

Effects of Cross-Border Conflicts. Suppose that due to cross-border conflicts in an economy, domestic firms export less in order to meet the higher domestic consumption of goods. At the same time, the import of foreign goods increases. Assuming that the economy is initially at full employment and the exchange rate remains constant, what happens to the GDP in the short run and the long run?