Question 2: The long list of central bank goals includes the stability of interest rates and

exchange rates. You look on the central bank website and note that the bank has increased

interest rates at every one of its meeting over the last year. You read the financial press and see

references to how the exchange rates have moved in response to these interest rate changes. How

could you reconcile this behavior with the central bank pursuing its objectives? (20 Marks)

NOTE: It is a 20 marks Question, kindly explain it properly. Thank You.