Use the following to answer questions . Exhibit: Effects of Monetary Policy -(Exhibit: Effects of Monetary Policy) In Panel (b), assume that the price of bonds rises from P₁ to P₂. Now, in Panel (c), the higher price of bonds will A) reduce the demand for and increase the supply of dollars and cause the exchange rate to increase. B) reduce the demand for and increase the supply of dollars and cause the exchange rate to rise. C) increase the demand for and reduce the supply of dollars and cause the exchange rate to increase. D) reduce the demand for and increase the supply of dollars and cause the exchange rate to fall.

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The Answer of Use the following to answer questions . Exhibit: Effects of Monetary Policy -(Exhibit: Effects of Monetary Policy) In Panel (b), assume that the price of bonds rises from P₁ to P₂. Now, in Panel (c), the higher price of bonds will A) reduce the demand for and increase the supply of dollars and cause the exchange rate to increase. B) reduce the demand for and increase the supply of dollars and cause the exchange rate to rise. C) increase the demand for and reduce the supply of dollars and cause the exchange rate to increase. D) reduce the demand for and increase the supply of dollars and cause the exchange rate to fall.

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