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can someone help me on these questions?? I will appreciate it! Thank you g. In the (flexible price) monetary model, if a country initially has
can someone help me on these questions?? I will appreciate it! Thank you
g. In the (flexible price) monetary model, if a country initially has a stable exchange rate and price level, but then suddenly increases its money supply growth rate by 10% per year, what happens to its rate of inflation and rate of depreciation? h. Suppose the ECB keeps the euro interest rate at 2% forever. The Fed now temporarily raises its interest rate this year from 2% to 7%. After this event, what is the expected rate of dollar depreciation if UIP holds over the coming year? (Hint: Use the approximate UIP formula.) i. In the last question, suppose the policies are temporary, and everyone believes the exchange rate will revert to its expected long run PPP value of $1.26 per euro one year from now. What will be the spot exchange rate ($/6) today? (Hint: Use the approximate UIP formula.) j. According to the trilemma, which three macroeconomic policies are mutually inconsistentStep by Step Solution
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