Lect04272011

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Unformatted text preview: nge Rates NX Exchange Rates && NX QUICK conclusion Effect of Demand for FX DFX is those with $ who want FX is DFX depends on U.S. demand for… for… … foreign goods & services … foreign assets SFX is those with FX who want $ SFX depends on foreign demand for … U.S. goods & services … U.S. assets Fiscal Policy International Terminology Exchange Rates NX Exchange Rates && NX QUICK conclusion 4 4/26/2011 8:48 AM Effect of Supply of FX Open Economy Macro PFX Y Effect of U.S. interest rates Monetary Policy in Open Economy Suppose interest rates in U.S. [Closed economy]: I [Open economy]: Also NX Why? interest rates in U.S. When $ falls, trade deficit falls When $ rises, trade deficit rises Fiscal Policy International Terminology Exchange Rates NX Exchange Rates && NX QUICK conclusion Fiscal Policy International Terminology Exchange Rates NX Exchange Rates && NX QUICK conclusion 5 4/26/2011 8:48 AM Concluding Remarks A proper review / conclusion on Monday My goals for you: Ability to read & understand economic news Appreciation for role of assumptions in arguments Awareness that any normative statement reflects a goal (even if the goal is unstated) Fiscal Policy International Terminology Exchange Rates & NX QUICK conclusion QUICK conclusion 6...
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This note was uploaded on 09/11/2012 for the course ECON 1 taught by Professor Martholney during the Spring '08 term at University of California, Berkeley.

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