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Use the money market and foreign exchange diagrams to answer the following questions about the relationship between the British pound and the U….

Use the money market and foreign exchange 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 pount. We want to consider how a change in the U.S. money supply affects interest rates. On all graphs label initial equilibrium point A.

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