7. Due to nancial distress, started in the housing market, people's demand for liquidity skyrockets. The US private sectors wants to hold more money, even absent any changes in US interest rates or real income. This panic is expected to be short-lived. What are its consequences for the Dollars/ Euro exchange rate if no US policymaker takes any action? What can the US Federal Reserve Board do to prevent any changes in US interest rates? If they intervene, what happens to the exchange rate? 8. Provide one reason why, year after year, in the long run, the US Dollar keeps appreciating against the Argentine Peso. Write down the condition which you are invoking. 9. If the Law of One Price holds, what should I expect to pay for a $20 bottle of liquor in Spain, if the Dollars / Euro exchange rate is 1.2 Provide an approximate