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Suppose the China is the home country and the US is the foreign country. Please further assume that prices are sticky with given certain expectations
Suppose the China is the home country and the US is the foreign country.
Please further assume that prices are sticky with given certain expectations of future exchange rates.
If there is a temporary increase in the money supply in the US, other things being equal, using the asset approach (illustrated by money market and foreign exchange market diagrams and you must have both diagrams to get full credit), please analyze and explain the transmission mechanism how the U.S. dollar would change its value against Chinese Yuan the short run
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