There are two countries, the United States and Venezuela. (a) For each country, use the graph below (or make your own) to set up the initial equilibrium for each country's currency market in period 1. Plot and label the initial curves for (i) the UIP condition, (ii) supply of real money balances, and (iii) the demand for real money balances. Indicate the initial equilibrium in each market. 1. Consider the over-shooting model we studied in class and under PPP with sticky prices. There are two countries, the United States and Venezuela. (a) For each country, use the graph below (or make your own) to set up the initial equilibrium for each country's currency market in period 1. Plot and label the initial curves for (i) the UIP condition, (ii) supply of real money balances, and (iii) the demand for real money balances. Indicate the initial equilibrium in each market. EVEF/USD Venezuela iVEF EUSD/VEF United States USD

There are two countries, the United States and Venezuela. (a) For each country, use the graph below (or make your own) to set up the initial equilibrium for each country's currency market in period 1. Plot and label the initial curves for (i) the UIP condition, (ii) supply of real money balances, and (iii) the demand for real money balances. Indicate the initial equilibrium in each market. 1. Consider the over-shooting model we studied in class and under PPP with sticky prices. There are two countries, the United States and Venezuela. (a) For each country, use the graph below (or make your own) to set up the initial equilibrium for each country's currency market in period 1. Plot and label the initial curves for (i) the UIP condition, (ii) supply of real money balances, and (iii) the demand for real money balances. Indicate the initial equilibrium in each market. EVEF/USD Venezuela iVEF EUSD/VEF United States USD

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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