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1. Explain why it would be difficult to maintain a fixed exchange rate between the euro and the dollar.

2. Assume the European Central Bank (ECB) believes that the dollar should be weakened against the euro.

Explain how the ECB could use direct and indirect intervention to weaken the dollar's value with respect to the euro. Assume that future inflation in the EU is expected to be low, regardless of the ECB's actions.

3. Briefly explain why a central bank may wish to weaken the value of its currency.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91607160

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