(Table: Mexico's Central Bank Balance Sheet) Suppose Foreign Interest Rates

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(Table: Mexico's Central Bank Balance Sheet) Suppose foreign interest rates rise in the United States, causing money demand to change by 150 million pesos. What will happen to reserves, domestic credit, and the backing ratio? Explain how these changes take place. (Table: Mexico's Central Bank Balance Sheet) Suppose foreign interest rates rise in the United States, causing money demand to change by 150 million pesos. What will happen to reserves, domestic credit, and the backing ratio? Explain how these changes take place.

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