Suppose Techoland and Cornsylvania form a currency union and adopt the electrocarrot as their common currency. Now

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Suppose Techoland and Cornsylvania form a currency union and adopt the electrocarrot as their common currency.

Now suppose again that there is an increase in demand for electronic goods in both countries and a simultaneous decline in demand for agricultural goods. As president of the central bank for the currency union, would you raise or lower the electrocarrot interest rate, or keep it the same? Explain.

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Economics

ISBN: 9781473768543

5th Edition

Authors: Gregory Mankiw, Mark P. Taylor

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