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2. Assume that yesterday the exchange rate between the Superstanian Riyal and the British Pound was 1 Riyal = 0.58 Pound. Assume that today the

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2. Assume that yesterday the exchange rate between the Superstanian Riyal and the British Pound was 1 Riyal = 0.58 Pound. Assume that today the Riyal is trading at 1 Riyal = 0.60 Pound. How will the change in the exchange rate affect each of the following in Superstan in the short run? A. Aggregate demand. (Increase or Decrease or No Change) B. The level of employment. (Increase or Decrease or No Change) C. Long Run Economic Growth.(Increase or Decrease or No Change) D. Long Run Phillip's Curve. (Increase or Decrease or No Change) E. Money demand. (Increase or Decrease or No Change) F. Suppose that Superstan wants to return the exchange rate to 1 Riyal = 0.58 Pounds. I. Should the Superstanian central bank buy or sell Riyals in the foreign exchange market? (buy or sell or neither) II. Should the Superstanian central bank buy or sell Pounds in the foreign exchange market? (buy or sell or neither)

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