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Part b: One Mark for Each Question On Friday, September 13, 1992, the lira was worth DM 0.0013065. Over the weekend, the lira devalued against
Part b: One Mark for Each Question
On Friday, September 13, 1992, the lira was worth DM 0.0013065. Over the weekend, the lira devalued against the DM to DM 0.0012613.
- By how much had the lira devalued against the DM?
- By how much had the DM appreciated against the lira?
- Suppose Italy borrowed DM 4 billion, which it sold to prop up the lira. What were the Bank of Italys lira losses on this currency intervention?
- Suppose Germany spent DM 24 billion in an attempt to defend the lira. What were the Bundesbanks DM losses on this currency intervention?
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