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If the exchange rate of the national currency is depreciating, explain what actions must the nation's Central Bank take in the foreign exchange market (if
- If the exchange rate of the national currency is depreciating, explain what actions must the nation's Central Bank take in the foreign exchange market (if any) to restore parity?
- Explain what the impact of such intervention to maintain a fixed exchange rate on the nation's money supply will be.
- What will happen to the rate of interest?
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