Answer the following questions. Please rewrite the questions and write in complete sentences and paragraphs. Remember...

 

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Answer the following questions. Please rewrite the questions and write in complete sentences and paragraphs. Remember that economics is a science and that we are concerned with describing what, how, and why behaviors occur, therefore it should be detailed enough to clearly convey the economic concepts, using the appropriate terminology. You should apply the material from this module and chapter and not the internet. 1. Assume that the Central Bank of Nation X is responsible for maintaining fixed exchange rates with a hard peg exchange rate. Now suppose that interest rates in Nation X are rising in relation to interest rates in other nations. How does the Central Bank of Nation X respond in order to keep the value of its currency stable? Explain both possible approaches. 2. How are exchange rates determined if that currency is allowed to float? T Answer the following questions. Please rewrite the questions and write in complete sentences and paragraphs. Remember that economics is a science and that we are concerned with describing what, how, and why behaviors occur, therefore it should be detailed enough to clearly convey the economic concepts, using the appropriate terminology. You should apply the material from this module and chapter and not the internet. 1. Assume that the Central Bank of Nation X is responsible for maintaining fixed exchange rates with a hard peg exchange rate. Now suppose that interest rates in Nation X are rising in relation to interest rates in other nations. How does the Central Bank of Nation X respond in order to keep the value of its currency stable? Explain both possible approaches. 2. How are exchange rates determined if that currency is allowed to float? T

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1 When the Central Bank of Nation X is responsible for maintaining fixed exchange rates with a hard peg exchange rate and interest rates in Nation X start rising in relation to interest rates in other ... View the full answer