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Illustrate how given scenarios affects the home country

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Reference no: EM131480067

Question: Using the IS-LM-FX model, illustrate how each of the following scenarios affects the home country. Compare the outcomes when the home country has a fixed exchange rate with the outcomes when the home currency floats.

a. The foreign country increases the money supply.

b. The home country cuts taxes.

c. Investors expect a future appreciation in the home currency.

Reference no: EM131480067

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