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Explain how nominal dollar exchange rate would be affected

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Reference no: EM13868772

1. Explain how the nominal dollar/euro exchange rate would be affected (all else equal) by permanent changes in the expected rate of real depreciation of the dollar against the euro.

2. Can you suggest an event that would cause a country's nominal interest rate to rise and its currency to appreciate simultaneously, in a world of perfectly ?exible prices?

Reference no: EM13868772

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