Use a figure to show the effect of a sterilized central bank purchase of foreign assets under the imperfect asset substitutability assumption
What will be an ideal response?
The interest parity condition is given by
R = R* + ( - E)/E +
Suppose that the domestic assets of the central bank fall from to through a sterilized purchase of foreign assets. Then the risk-adjusted return increases and the exchange rate increases.
Economics
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Who runs the Federal Reserve System? Describe the organizational structure of the Fed
Economics
The intent of indexing is to
a. raise tax revenue automatically during inflation. b. shift the short-run Phillips curve to the right. c. take most of the sting out of inflation. d. reduce inflation gradually.
Economics