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prices, international allocations of world investment across countries, and underlying terms of trade changes. Unanticipated … States. The history of world monetary policy is reviewed along with the determination of real exchange rates within the Euro …
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Central Banks that are primarily concerned with the behavior of prices will use monetary policy to insulate prices from exchange rate changes. Prices then appear unresponsive to the exchange rate. The observed relationships between prices and the exchange rate will reflect Central Bank actions...
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