Question: Starting from your graphical results of Problem 7b, show graphically the effect on YE and on XM of a depreciation of the nations currency from

Starting from your graphical results of Problem 7b, show graphically the effect on YE and on X–M of a depreciation of the nation’s currency from a position of full employment and a trade deficit.

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The XM function would shift up as in Figure 9 without full employment ... View full answer

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