Imagine that there are two economies in the world: Bostonia and New Yorkland. Bostonia’s currency is the sock and New Yorkland’s is the yank. Despite the longstanding rivalry between their citizens, Bostonia and New Yorkland are trading partners. The Central Bank of New Yorkland decides to conduct contractionary monetary policy. Explain the short-run effect, if any, on the following: The sock/yank nominal exchange rate New Yorkland’s net exports Bostonia’s net exports

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