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Interest rate on the us dollar

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Reference no: EM131480186

Until January 2002, the Argentine peso was pegged on a one-to-one basis against U.S. dollar in an arrangement known as a currency board. Suppose that, to begin with, this exchange rate is an equilibrium rate. Use the IS-LM-FX diagram to show how Argentina's output Y, interest rate i, and trade balance TB change when Argentina can respond to a decrease in the interest rate on the U.S. dollar.

Reference no: EM131480186

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