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Unformatted text preview: Leads to higher interest rate The NCO curve shifts out to the right as well o Leads to increased Q of NCO, and higher Q of currency produced, and lowered E (exchange rate) o Trade Policy New tariff imports decrease, exports stay same o D = X- IM D shifts up o Leads to increase of Exchange rate E o Q of NX doesnt change b/c stronger $ offsets tariff Nothing else changes. Q of currency stays same. Nothing changes b/c we assume NCO is perfectly inelastic. 21/03/2008 11:13:00 21/03/2008 11:13:00...
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- Spring '08