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Could anyone please answer this question? I will give you thumbs up. Thank you! 6. (15 points) How can one rely on the uncovered interest

Could anyone please answer this question? I will give you thumbs up. Thank you!

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6. (15 points) How can one rely on the uncovered interest parity condition to explain the exchange rate when it assumes that everyone has the same expectation of the future? If you and I expect that the domestic currency is going to appreciate in the future by an identical magnitude, would you sell domestic currency to me? Should not there be an uncovered interest parity condition for each expected value of the expected exchange rate? 50 for the Mindividual, the expected . . . E? exchange rate Is Eie and the relevant equation Is R$ = RE + # 1 and therefore there are as 1 many equilibrium exchange rates as individuals. If so, what is the meaning ofthe equilibrium exchange rate? How can one reconcile the possibility of a multiplicity of exchangerate expectations with the use of a single expected exchange rate in the uncovered interest parity condition? Would Keynes' chapter 12 help resolve this tension?1]

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