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Question 2 a. Briefly describe how various economic factors can affect the equilibrium exchange rate of the Japanese yen's value with respect to that of

Question 2

a. Briefly describe how various economic factors can affect the equilibrium exchange rate of the Japanese yen's value with respect to that of the dollar. 20 marks

b. A recent shift in the interest rate differential between the United States and Country A had a large effect on the value of Currency A. However, the same shift in the interest rate differential between the United States and Country B had no effect on the value of Currency Explain why the effects may vary. 10 marks

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