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Suppose that the US government deficit causes interest rates in the United States to rise relative to those in the European Union. a. Assuming

b. Show this change on the graph below using the market for foreign exchange. c. What can you conclude about

Suppose that the US government deficit causes interest rates in the United States to rise relative to those in the European Union. a. Assuming all else remains constant, explain how this would impact the supply and demand for US dollars. b. Show this change on the graph below using the market for foreign exchange. c. What can you conclude about the exchange rate?

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