Elucidate how a temporary decrease in the us money supply

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Use the money market and foreign exchange (forex) diagrams to answer the following questions about the relationship between the British pound and the U.S. dollar. Let the exchange rate be defined as U.S. dollars per British pound. We want to consider how a change in the U.S. money supply affects interest rates and exchange rates. On all graphs, label the initial equilibrium point A.

Elucidate how a temporary decrease in the U.S. money supply affects the money and FOREX markets. Label your short-run equilibrium point B and your long-run equilibrium point C.

Reference no: EM1352267

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