11 Intl Econ Notes

11 Intl Econ Notes - opportunity cost) • In short run,...

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Int’l Econ Notes 5/18/09 What determines interest rate differential in the short run o In short run, price level is not flexible Money demand is a decreasing function of the nominal interest rate (slide 5) Increase in money supply leads to decrease in nominal interest rate The price of money is the interest rate (i.e. the price of money is the
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Unformatted text preview: opportunity cost) • In short run, exchange rate is determined by uncovered interest parity • What determines exchange rate? • What determines balance of payments?the dif btw long run and short run is the ability of price level to change •...
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This note was uploaded on 12/27/2009 for the course IRPS IRCO 403 taught by Professor Gordonhansonandtakeohoshi during the Spring '09 term at UCSD.

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