The central bank do to keep the peso cost of the dollar

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Reference no: EM1321324

Q1. At the time Mexico had a fixed exchange rate system against the US dollar. Assume the Mexican central bank was committed to keeping the peso cost of the dollar equal to Peso 3.4425. Illustrate what must the central bank do to keep the peso cost of the dollar equal to Peso 3.4425 subsequent the speculators activities? Please be specific. Additionally, please demonstrate the effect that the Mexican central banks activities would have in the marketplace for dollars.

Q2. Compute the 95% confidence interval for the autocorrelation coefficient for time lag 1 for a series that contains 80 terms.

Reference no: EM1321324

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