Impact of exchange rates on interest rates

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Impact of Exchange Rates on Interest Rates:

Assume that if the U.S. dollar strengthens it can place downward pressure on U.S. inflation.

Based on this information, how might expectations of a strong dollar affect the demand for loanable funds in the United States and U.S. interest rates?

Is there any reason to think that expectations of a strong dollar could also affect the supply of loanable funds? Explain.

Reference no: EM131225779

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