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The exchange-rate effect is based, in part, on the idea that 1. an increase in the price level causes investors to move some of their funds overseas....

The exchange-rate effect is based, in part, on the idea that

1. an increase in the price level causes investors to move some of their funds overseas.
2. an increase in the price level causes domestic goods to become less expensive relative to foreign goods.
3. a decrease in the price level reduces spending on net exports.
4. a decrease in the price level reduces the interest rate.

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3. a decrease in the price level reduces spending on net exports.
THE EXCHANGE-RATE EFFECTS
Due to the rapid growth in the international economics all over the world and the
introduction of the...

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