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Q. What is the purpose of the following figure?
Answer:
The use of the figure is to show the inflation convergence within the six original EMS members. The figure demonstrates the difference between domestic inflation and German inflation for six of the original EMS members. As of 1997 every national inflation rates were very close to the German levels.
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Q. Use a figure to study the following question: Consider that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the asset and output markets
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