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b. Now, suppose the government unexpectedly runs a $200 million deficit in the year 2016 and the money supply is unchanged. Illustrate this change on

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b. Now, suppose the government unexpectedly runs a $200 million deficit in the year 2016 and the money supply is unchanged. Illustrate this change on your diagram. What is the new level of reserves? c. If the deficit is unexpected, will the central bank be able to defend the fixed exchange rate? d. Suppose the government runs a deficit of $200 million each year from this point forward. What will eventually happen to the central bank's reserves? e. In what year will the central bank be forced to abandon its exchange rate peg and why? f. What if the future deficits are anticipated? How does your answer to part (e) change? Explain briefly

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