Question 2: The long list of central bank goals includes the stability of interest rates and exchange
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Question 2: The long list of central bank goals includes the stability of interest rates and
exchange rates. You look on the central bank website and note that the bank has increased
interest rates at every one of its meeting over the last year. You read the financial press and see
references to how the exchange rates have moved in response to these interest rate changes. How
could you reconcile this behavior with the central bank pursuing its objectives? (20 Marks)
NOTE: It is a 20 marks Question, kindly explain it properly. Thank You.
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