Question: Question 9 (6 points): We can use the asset approach to both make predictions about how the market will react to current events and understand

Question 9 (6 points): We can use the asset approach to both make predictions about how the market will react to current events and understand how important these events are to investors. Consider the behavior of the Union/Confederate exchange rate during the Civil War. How would each of the following events affect the exchange rate, defined as Confederate dollars per Union dollar, EC$/$?

(a) (2 points) The Confederacy increases the money supply by 2,900% between July and December 1861.

(b) (2 points) The Union Army suffers a defeat in Battle of Chickamauga in September 1863.

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