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Problem 2. The State Bank of Vietnam (SBV) tended to maintain a relatively fixed exchange rate between doug and dollars during the favorable time, but
Problem 2. The State Bank of Vietnam (SBV) tended to maintain a relatively fixed exchange rate between doug and dollars during the favorable time, but moved to a more flexible exchange rate policy in the difficult periods when exports and capital inflows dropped (3 points, maximum 2000 words). Using the DD-AA model, show that this exchange rate policy can assist the economy in mitigating the adverse effect of external shocks such as a temporary drop in the demand for Vietnam's exports. (Note: you must use the graph of DD-AA model for this question)
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