Otherwise, as explained above, if the currencies of two different countries are freely floating, as one country expands its money supply, its currency will fall in price against its paired currency.
The hypothesized precondition of freely floating interest rate implied in Classic IS-LM Pattern does not adapt to the objective reality of interest rate control in China at present.
This is how we value our currency, and against all other currencies exchange rates are freely floating.
A more freely floating currency would ease this stop-and-go cycle.
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