A new government has been elected in a country that now has a high inflation rate and
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A new government has been elected in a country that now has a high inflation rate and a floating exchange rate. The new government is committed to reducing the country’s inflation rate.
a. If the government continues to use a floating exchange rate, what will the government need to do to reduce the high inflation rate?
b. As part of its effort to reduce the country’s inflation rate, why might the country’s government consider a change to using a currency board and a fixed exchange rate with one of the major currencies of the world?
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a In the short run the country must implement policies to reduce aggregate demand The reduction in a...View the full answer
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