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REAL EXCHANGE RATE -20 Market for Foreign-Currency Exchange -15 10 -10 2 10 QUANTITY OF DOLLARS (Billions) 0 Demand 5 15 20 -A Initial Supply

REAL EXCHANGE RATE -20 Market for Foreign-Currency Exchange -15 10 -10 2 10 QUANTITY OF DOLLARS (Billions) 0 Demand 5 15 20 -A Initial Supply 40 Supply with Deficit

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