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1.This question concerns equilibrium in the foreign exchange market, as shown by figure 15-2 in the textbook.For each of the following explain whether the foreign
1.This question concerns equilibrium in the foreign exchange market, as shown by figure 15-2 in the textbook.For each of the following explain whether the foreign return or domestic return will shift, and in which direction, and the effect on the spot exchange rate, (E$/).
a.The exchange rate (E$/) is expected to increase in the future.
b.The Federal Reserve lowers the U.S. interest rate
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