In 2011, an array of factors, including the conflict in Libya, contributed to soaring oil prices. One of the beneficiaries of the situation was Venezuela, whose main export was (and is) oil. Venezuela had a fixed exchange rate (the Bolivar was pegged to the U.S. dollar) and low international capital mobility. How would the increased value of Venezuelan oil exports affect: a. Venezuela’s nominal, bilateral (Bolivar: U.S. dollar) exchange rate (i.e., $/VEF or VEF/$)? (Show graphically and briefly explain) b. Venezuela’s real risk-free interest rate? (Show graphically and briefly explain) c. Venezuela’s reserve assets?
In 2011, an array of factors, including the conflict in Libya, contributed to soaring oil prices. One of the beneficiaries of the situation was Venezuela, whose main export was (and is) oil. Venezuela had a fixed exchange rate (the Bolivar was pegged to the U.S. dollar) and low international capital mobility. How would the increased value of Venezuelan oil exports affect: a. Venezuela’s nominal, bilateral (Bolivar: U.S. dollar) exchange rate (i.e., $/VEF or VEF/$)? (Show graphically and briefly explain) b. Venezuela’s real risk-free interest rate? (Show graphically and briefly explain) c. Venezuela’s reserve assets?
Chapter1: Making Economics Decisions
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In 2011 an array of factors including the conflict in
In 2011, an array of factors, including the conflict in Libya, contributed to soaring oil prices. One of the beneficiaries of the situation was Venezuela, whose main export was (and is) oil. Venezuela had a fixed exchange rate (the Bolivar was pegged to the U.S. dollar) and low international capital mobility. How would the increased value of Venezuelan oil exports affect:
a. Venezuela’s nominal, bilateral (Bolivar: U.S. dollar) exchange rate (i.e., $/VEF or VEF/$)? (Show graphically and briefly explain)
b. Venezuela’s real risk-free interest rate? (Show graphically and briefly explain)
c. Venezuela’s reserve assets?
In 2011 an array of factors including the conflict in
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