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Briefly state the three main reasons that central banks enter the foreign exchange markets. Fill in the table with the arrows ( or ). Factors
- Briefly state the three main reasons that central banks enter the foreign exchange markets.
- Fill in the table with the arrows ( or ).
Factors that move the exchange rates | Changes in demand for assets denominated in the domestic currency |
A decrease in the expected future exchange rate |
|
Expected quotas on imports
|
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A decrease in the domestic interest rate |
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A decrease in the expected domestic price level relative to foreign countries |
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