Currency crises and the demand for dollars: Suppose there is a currency crisisin the rest of the world, leading to an increase in demand for U.S. dollars (a“fight to safety”). Use the AS/AD framework to explain the efects of thisshock on the U.S. economy. Be sure to explain carefully how and why theshock enters the AS/AD model. (Hint: If the rest of the world would likemore dollars, what does it have to give in exchange for those dollars?

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