How monetary policy can influence international capital flow

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Assume the MAS implements a tight monetary policy. Consider the impact this will have on international capital flows.

a) Explain how monetary policy can influence international capital flows.

b) Illustrate the impact from this scenario, ceteris paribus, to show how Singapore's equilibrium exchange rate may be impacted.

c) Discuss implications for Singapore's economy, ceteris paribus, resulting from a change in the equilibrium interest rate identified in part b).

Reference no: EM132620488

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