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Exchange rates and the corresponding changes

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Reference no: EM131901286

1) Does a higher inflation rate in an economy, other things being equal, affect the exchange rate of its currency? If so, how?

2) We learned that monetary policy is amplified by changes in exchange rates and the corresponding changes in the balance of trade. From the perspective of a nation's central bank, is this a good thing or a bad thing?

Reference no: EM131901286

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