- Instruction Answer Three Questions For Full Points Where Computation Is Required Show All Working 1 In The 2008 Glo 1 (86.9 KiB) Viewed 51 times
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Instruction: Answer three questions. For full points, where computation is required, show ALL working 1. In the 2008 global financial crisis, many investors considered the U.S. economy a safe place to move their assets. a. What is the predicted impact of this inflow of financial capital to the United States on the U.S. interest rate? b. Given the above, what is the likely impact of this inflow on the U.S. nominal exchange rate? c. If relative prices remain fixed, what is the likely impact of this inflow on the real exchange rate in the United States? d. What will be the likely impact of the foregoing on the trade balance in the United States? e. How might your answer to the above question change if you were informed that Purchasing Power Parity does not exist between the United States and other countries?