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Changes in nation’s monetary and fiscal policies affect the exchange rates and its balance of trade through the real interest rate,
01 / 10 / 2021
Economics
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Changes in nation’s monetary and fiscal policies affect the exchange rates and its balance of trade through the real interest rate, income, and the price level. Changes in the value of a country’s currency affect the balance of trade which affects aggregate demand.
How variations in currency values affect the aggregate demand, and hence the output and price level of goods and services?
