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What are the three pathways through which fiscal policy can influence exchange rates?
Long-Run Economic Losses
Persistent negative financial outcomes for firms or the economy that occur over an extended period, often due to structural issues.
Production Costs
Expenses incurred in the manufacturing or creation of goods, including labor, materials, and overhead.
Price-Taker Market
A market situation where individual buyers and sellers have no influence over the price of a product due to the product's homogeneity and the presence of many participants.
Profit-Maximizing Firm
A company that operates in a way that its primary goal is to achieve the highest possible profit.
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