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Consider two countries: India ( rupees ) and Japan ( Yen ) . Suppose that everyone expects inflation rate to drop in India. Also, everyone

Consider two countries: India (rupees) and Japan (Yen). Suppose that everyone expects inflation rate to drop in India. Also, everyone expects the stock market to perform very well in India. How will this impact the quantity of currency exchanged between these two markets.

Question 29 options:

a.  The Q exchanged will increase

b.  The Q exchanged will decrease

c.  We cannot determine what will happen to the quantity exchanged.

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