Use the asset market and money market figure to study the short run effects of a change in market belief with regards to the flexible exchange rate and the fixed exchange rate, in particular assume market participants expect the government to devaluate. C

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Use the asset market and money market figure to study the short run effects of a change in market belief with regards to the flexible exchange rate and the fixed exchange rate, in particular assume market participants expect the government to devaluate. Compare these two effects.

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