Write an equation expressing interest rate, Physics

Assignment Help:

Q. Assume an economy is in a liquidity trap.

A. Write an equation expressing interest rate parity under a fixed exchange rate regime.

Answer: Liquidity trap entail R = 0.  R = 0 = R* + (Ee - E)/E.

B. Assume Ee is fixed.  Suppose that the central bank raises the domestic money supply so as to depreciate the currency temporarily (that is, to raise E currently but return the rate to Ee later).  Show that E cannot be raised.

Answer:  Ever since R = 0 the equation in part A the interest parity condition implies E = Ee / (1- R*) as Ee and R* are fixed E can't change.


Related Discussions:- Write an equation expressing interest rate

Entropy., 84.1grams of He are compressed reversibly and isothermal at 100.0...

84.1grams of He are compressed reversibly and isothermal at 100.0C from 28.0Litre to 7.37Litres. Calculate the the entropy change in joules/K.

Direction of current in loop by the changing magnetic field, Q. Point out t...

Q. Point out the direction of the current if any induced to flow in the loop by the changing magnetic field. (Describe is the loop as viewed from above.)s Answer: 1.

Determine magnitude of the charge on capacitor''s plates, A 10 farad capaci...

A 10 farad capacitor is used in a circuit. The voltage difference between the plates of the capacitor is 20 volts. What is the magnitude of the charge on each of the capacitor's pl

Calculate diameter of the ball, A ball is 6.5 m from a convex mirror with a...

A ball is 6.5 m from a convex mirror with a magnification of 0.75. If the image is 0.25 m in diameter. What is the diameter of the actual ball?

Brief explanation of newton’s third law of motion, EXPLANATION: Wheneve...

EXPLANATION: Whenever an interaction occurs among two objects, each object exerts the similar force on the other, but in the opposite direction and for the similar length of ti

Motion, what is uniform motion

what is uniform motion

Determine the distance between two objects, If the distance between two obj...

If the distance between two objects, each of mass 'M', is tripled, the force of attraction between the two objects is: a)  1/2 the original force b)  1/3 the original fo

High acuity nursing care, High Acuity Nursing Care: Issues Paper Pu...

High Acuity Nursing Care: Issues Paper Purpose:             The student nurse will use knowledge gained through class work, clinical, and independent library investigati

Determine the pressure - hydraulics and hydrology, Points A and B are separ...

Points A and B are separated by 3000 ft of new 6-in schedule-40 steel pipe. 800 gpm of 60 deg F of water flow from point A to point B. Point B is 60 ft above point A. What must be

In the nucleus of 20 ca 40 there are, In the nucleus of 20 Ca 40   there ...

In the nucleus of 20 Ca 40   there are: (1) 40 protons and 20 electrons (2) 20 protons and 40 electrons  (3) 20 protons and 20 neutrons (4) 20 protons and 40 neutrons

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