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Q. Explain the following figure:
Answer: The figure explicate how the money markets of two countries are linked through the foreign exchange market. The financial policy actions by the Fed affect the U.S. market interest rate changing the dollar/euro exchange rate that clears the foreign exchange market. The European System of Central Banks (ESCB) is able to affect the exchange rate by changing the European money supply and interest rate.
Q. The United States seems at times to have a totally schizophrenic attitude toward protectionism. The United States was the country that proposed the establishment of the World
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