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Assume that, as a result of the ongoing conflict, Kwangya consumers are concerned about the country's economic situation. They begin to save more in anticipation

Assume that, as a result of the ongoing conflict, Kwangya consumers are concerned about the country's economic situation. They begin to save more in anticipation of future uncertainty.

Explain the difference in the impact on the Kwangya economy when using a floating exchange rate versus a fixed exchange rate if foreign demand for Kwangya's exports falls.

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