Will its position he disturbed by such a rise in

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Use the DD-AA model to examine the effects of a one-time rise in the foreign price P*. If the expected future exchange tate rises immediately in proportion to Pk (in line with PPP), show that the exchange rate will also appreciate immediately in pro-portion to the rise in P. If the economy is initially in internal and external balance. will its position he disturbed by such a rise in •?

Reference no: EM131248323

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