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311M99S - He deposits the Yen with a Japanese bank which...

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c). (10 points) By how much does G have to decrease to attain government budget balance in equilibrium? d). (10 points) Suppose now that G = 200. By how mucn should M s /P increase in order for r to remain as in b) in equilibrium?
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QUESTION 3 (10 points) A US investor exchanges $US150 for Yen at the rate of 120 Yen per US dollar.
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Unformatted text preview: He deposits the Yen with a Japanese bank, which pays an annual interest rate of 10%. At the end of the year he closes his account and buys US$ at an exchange rate of 115 Yen per US dollar. What is the net % return in $US of this operation?...
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