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Suppose that in an effort to fend off an onset recession, a central bank determines it is necessary to lower interest rates. Given our toolset
Suppose that in an effort to fend off an onset recession, a central bank determines it is necessary to lower interest rates. Given our toolset from this unit, what should our expectation be will occur with respect to exchange rates? Do these differ in the short and long-run? Now suppose that the central bank deems it necessary to keep rates at this new, lower level in perpetuity. Now what will occur as we move forward into the longer-run?
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