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According to the monetary approach to exchange rate determination, how would an increase in foreign real...

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Accounting

According to the monetary approach to exchange ratedetermination, how would an increase in foreign real income affectthe value of domestic currency? In your explanation, discuss boththe quantity theory and PPP

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4.3 Ratings (624 Votes)
Let us understand this with a logical flow A central bank of an economy print new currency to increase the money supply in the economy according to the assets it is having is the back And foreign currency is one of those assets So as the real foreign income rises Foreign currency inflows will rise which will be translated into the    See Answer
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