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Official intervention in the foreign exchange market does appear to be a useful policy when overshoots take place in fragile circumstances.
a. What is an overhsoot?
b. Explain the exact form of this official intervention to counteract a specific overshoot.
c. What does official intervention do that makes it useful?
Please answer specific questions, not general concepts
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Illustrate what emissions fee should be imposed to achieve the cost-effective outcome. How much would each firm pay in taxes.
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