Answer the following question: How do exchange rates and interest r...

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Answer the following question: How do exchange rates and interest rates affect the economy?

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Exchange rates and interest rates together can have a substantial impact on the growth of the economy. If the interest rates are higher in the economy, there would be the higher inflow of foreign funds in the economy and this would boost the foreign direct investment in the economy. This is because investors would seek to invest funds in economies where they can earn high rates of return on the investment. They would prefer to borrow...

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