Does capital inflow lower us interest rates, Managerial Economics

Assignment Help:

Basic textbook models, such as the Mundell-Fleming model, say that capital inflow happens due to the domestic interest rate being higher than the world interest rate, and therefore capital inflow. So according to this model, it can lower interest rates so that interest rates stabilize to the world interest rate. Though, there is a checklist that requires to be ticked off and this checklist is like a chain, for example if domestic interest rates are high then there is going to be capital inflow, the domestic money will appreciate due to the enhance in demand for the currency, therefore Net Exports will decrease until exchange rates have stabilized.

 


Related Discussions:- Does capital inflow lower us interest rates

What is increasing marginal cost, What is increasing marginal cost? Fel...

What is increasing marginal cost? Felix’s marginal cost is greater the more lawns he has previously mowed. It is, every time he mows a lawn, the extra cost of doing still anoth

What do you mean by ordinal utility, Q. What do you mean by Ordinal utility...

Q. What do you mean by Ordinal utility? A method of analysing utility or satisfaction derived from consumption of services andgoods, based on a relative ranking of services and

Give brief description about economics, Economics is generally defined as t...

Economics is generally defined as the problem of how best to allocate limited resources, limited because needs are characterized as unlimited, but common sense tells us that rather

Assignment, Marris constraints of growth maximisation

Marris constraints of growth maximisation

Oligopoly, pricing under oligopoly

pricing under oligopoly

Analysis of team production, Q. Analysis of team production? Harold Dem...

Q. Analysis of team production? Harold Demsetz and Armen Alchian's analysis of team production is a clarification and amplification of earlier work by Coase. According to them,

Advantages of product differentiation, Advantages of Product Differentiatio...

Advantages of Product Differentiation We can distinguish between those advantages for the firm itself and those for the consumer: a.          For the firm. i.

Explain the demand for a commodity, Explain the demand for a commodity ...

Explain the demand for a commodity The functional relationship between demand for a commodity and its various determinants may be expressed mathematically in terms of a demand

Short-term policies to cure balance of payment deficits, Short-Term Policie...

Short-Term Policies Deflation is a policy of reducing expenditure with the intention of curing a deficit by reducing the demand for imports.  This reduction of expenditure m

Objectives of imf, Objectives of IMF To achieve these objectives, the ...

Objectives of IMF To achieve these objectives, the following conditions would have to be fulfilled: - i.            Countries should not impose restrictions in their trade

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd