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How do you show the effects of a decrease in aggregate income using the foreign exchange market?

Posted on January 17, 2015 at 11:25 AM

Suppose one economy is in recession while another country’s economy is strong. The country in recession won’t be able to import as many goods since income is low. Therefore, it will supply less currency to the foreign exchange market. When this happens, the value of currency will appreciate.

AP Macroeconomics Unit 6 International Trade

Categories: AP Macroeconomics, Macro Unit 6 International Trade

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