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Assume the overshooting model provides an accurate description on the relationship between money supply and foreign exchange rate (expressed as dollar per euro).Assume there is

Assume the overshooting model provides an accurate description on the relationship between money supply and foreign exchange rate (expressed as dollar per euro).Assume there is a permanent decrease in the money supply in the US. Discussion how the price level,domestic interest rate and the foreign exchange rate will change in the short-run and the long-run respectively

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