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6. According to the foreign exchange rate equilibrium, what is the new level of the spot exchange rate? How large is the depreciation of the

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6. According to the foreign exchange rate equilibrium, what is the new level of the spot exchange rate? How large is the depreciation of the home currency? 7. Return to part 4. Now assume that the Central Bank refuses to change the interest rate from 10%. In this case, what is the new level of output? What is the money supply? And if the government decides to use scal policy instead to stabilize output, then according to the new IS curve, by how much must government spending be increased to achieve this goal? Call this case 3

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