What happens in the home money and fx markets

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Reference no: EM13179935

Consider the U.S. (home) and the euro area (foreign).

1. What happens in the home money and FX markets if there is a temporary contraction in the home money supply?

2. What happens in the home money and FX markets if there is a temporary contraction in the foreign money supply?

3. What happens in the short run and long run if there is a permanent decrease in the home money supply?

Reference no: EM13179935

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