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If the foreign inflation rate rises permanently, would you expect a floating exchange rate to insulate the domestic economy in the short run? What would
If the foreign inflation raterises permanently, would you expect a floating exchange rate to insulate the domestic economy in the short run? What would happen in the long run? In answering the latter question, pay attention to the long-run relationship between domestic and foreign nominal interest rates. whats the answer to this question? :)
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