What do you mean by capital flows, Macroeconomics

Assignment Help:

Q. What do you mean by Capital Flows?

With free capital flows, this is a very unreasonable assumption. If we domestic interest rate increase against the foreign interest rates, capital will flow into our country that would drive down the domestic interest rate again. 

Most reasonable models in that domestic interest rate is affected by foreign interest rates are more complicated. To understand such models, you should first understand models where this complication doesn't arise. Additionally predictions from models where domestic interest rate isn't affected by foreign interest rates are fairly similar to more realistic models which allows for capital flows.


Related Discussions:- What do you mean by capital flows

Unemployment, explain the phillips curve the relationship of inflation and ...

explain the phillips curve the relationship of inflation and unemployment

Production function and growth, Q. Production function and Growth? From...

Q. Production function and Growth? From the simple production function Y = f(L, K), we can classify three sources of growth:  An increase in L. An increase in K.

Differentiate demand elasticity and supply elasticity, Describe elasticity?...

Describe elasticity? Differentiate demand elasticity and supply elasticity? What is arc elasticity? Please describe graphically with proper mathematical representation?

Opportunity set, constructing a opportunity set and budget line for $15 lot...

constructing a opportunity set and budget line for $15 lottery ticket and intending on buying a candy bar for $0.75 and peanut bag for $1.50

Lagrangian of the consumer, This problem substitutes financial health with ...

This problem substitutes financial health with housing in a 2 period consumption savings model. The representative consumer has the utility function u(c1, c2) = lnc1 + lnc2 with ea

Major union wage settlement, Show the effects on the price level and real G...

Show the effects on the price level and real GDP of a major union wage settlement that significantly increases wages. Is this a supply shock, a demand shock, or both?

Standard deck of playing cards, Suppose you are dealt two cards from a stan...

Suppose you are dealt two cards from a standard deck of playing cards. a) What is the probability of being dealt a pair of aces? b) There are 13 possible pairs possible (Aces throu

Private sector in the circular flow, Private sector in the circular flow ...

Private sector in the circular flow The private sector total income is known as the national income. Because private sector receives the entire return from the factors of pr

IS and LM model, An economy shows the following features C=50+0.9(Y-T) T=1...

An economy shows the following features C=50+0.9(Y-T) T=100 I=100-5i G=100 L=0.2Y-10i M/P=100 X=20 M=10+0.1Y a)Obtain the IS and LM for this economy b)Find out the equilibrium inc

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