Elucidate the effects of such expectations

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Reference no: EM1360294

The dollar-euro exchange rates are freely determined in foreign exchange market. Suppose that the Federal Reserve is expected to lower nominal interest rate next month. Use the IS-LM-FX model to elucidate the effects of such expectations on the following variables today: output (Y), nominal interest rate (i), exchange rate (E), investment (I) and trade balance

Reference no: EM1360294

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