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Suppose both the Fed and ECB always use the Taylor rule. What happens to the US/Euro exchange rate (number of dollars per euro) today if:
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Suppose both the Fed and ECB always use the Taylor rule. What happens to the US/Euro exchange rate (number of dollars per euro) today if: a. Today the inflation differential Europe - USA increases? b. It is announced today (time t) that the U.S. real GDP growth rate will increase at t+1?
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