Question: How would a decrease in the money supply of Paraguay (currency unit: the guaran) affect its own output and its exchange rate with Brazil (currency

How would a decrease in the money supply of Paraguay (currency unit: the guaraní) affect its own output and its exchange rate with Brazil (currency unit: the real)? Do you think this policy in Paraguay might also affect output across the border in Brazil? Explain.

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A decrease in the real money supply leads to a leftward shift in the LM curve This leads to ... View full answer

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