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An Increase in the Interest Rate Causes

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An increase in the interest rate causes


Definitions:

Floating Exchange Rates

A system where the value of a currency is allowed to fluctuate according to the foreign exchange market without direct government control.

National Currencies

The official money used in different countries, which serves as a medium of exchange within each nation and can have different forms such as notes and coins.

Buying Power

The amount of goods or services that can be purchased with a unit of currency.

Flexible Exchange Rates

A currency system where the price of a country's currency is set by the forex market based on supply and demand relative to other currencies.

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