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In November 2020, the Central Bank of Foreignland increased the target overnight rate. Assuming that Northland is the home country, explain and show the impact

In November 2020, the Central Bank of Foreignland increased the target overnight rate. Assuming that Northland is the home

country, explain and show the impact of this policy on the exchange rate of Northland's currency (N$) against Foreignland's currency (F$).

Fully label your figure. Hint: First determine the implications of a higher target overnight rate for money supply.

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