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a. Explain how a business establish in Mexico would likely be affected (at least in the short run) if the central bank of Mexico intervened in the

a. Explain how a business establish in Mexico would likely be affected (at least in the short run) if the central bank of Mexico intervened in the foreign exchange market by exchanging Mexican pesos for dollars in the foreign exchange market.

b. Explain how your business would likely be affected if the central bank of Mexico used indirect intervention by lowering Mexican interest rates (assume inflationary expectations have not changed).

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1.This type of direct intervention which places downward pressure on the peso, which would... View the full answer

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