Rate of foreign investment in us assets

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Reference no: EM1373887

Assume that the Fed perceives inflation on horizon and decides to follow a contractionary monetary rule. Describe the effects of this rule on the exchange rate of dollar. Be specific. What effect will this policy have on United States firms that export to foreign countries? Explain. What effect will this policy have on American consumers' purchases of foreign goods? Describe how this policy will change (1) the U.S. balance of trade, and (2) the rate of foreign investment in United States assets.

Reference no: EM1373887

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