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Think of Asset Approach and consider we have an equilibrium in Foreign Ex- change Rate Market (or Forex). Then consider the following situation: Home Interest

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Think of Asset Approach and consider we have an equilibrium in Foreign Ex- change Rate Market (or Forex). Then consider the following situation: Home Interest Rate (Policy Rate) decreases. How does (spot) exchange rate change? Show your work on a graph and explain the intuition step by step

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