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ECON231_Assignment5_F11

ECON231_Assignment5_F11 - ECON 231 Section 2 Introduction...

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Page 1 of 3 Pages ECON 231 – Section 2 Introduction to International Economics Instructor: Sharif F. Khan Department of Economics University of Waterloo Fall 2011 Assignment 5 (Optional) Total Marks: 50 Part B True/ False/ Uncertain Questions [10 Marks] Explain why the following statement is True, False, or Uncertain according to economic principles. Use diagrams and / or numerical examples where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. B1. [5 Marks] According to the asset approach to exchange rate determination, other things remaining constant, an increase in the U.K. nominal interest rate causes the U.S. dollar to appreciate against the British pound in the short run. [Diagrams Required] B2. [5 Marks] According to the asset approach to exchange rate determination, all else equal, a rise in the expected future exchange rate causes a rise in the current equilibrium exchange rate in the short run. [Diagrams Required ]
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ECON231_Assignment5_F11 - ECON 231 Section 2 Introduction...

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