Contractionary monetary policy increases foreign reserves
Question: Please provide a step-by-step explanation:"Under a fixed exchange rate system, contractionary monetary policy increases foreign reserves at the central bank." Comment on this statement with the help of an IS-LM diagram.
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Problem 1. What is the impact of a trade deficit on the exchange rate value of the dollar?
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"Under a fixed exchange rate system, contractionary monetary policy increases foreign reserves at the central bank." Comment on this statement
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