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Suppose that there is a temporary decline in the foreign interest rate (if ), money supply remains constant, and prices are sticky in the short
Suppose that there is a temporary decline in the foreign interest rate (if ), money supply remains constant, and prices are sticky in the short run. Explain how the exchange rate and interest rate respond in the short run. Does the home currency appreciate or depreciate? Use graphs and/or equations to explain your results
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Economics
Authors: Stephen Slavin
11th Edition
978-0078021800, 0078021804
