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

Macroeconomics: Principles and Policy (MindTap Course List)

13th Edition

ISBN:9781305280601

Author:William J. Baumol, Alan S. Blinder

Publisher:William J. Baumol, Alan S. Blinder

Chapter19: The International Monetary System: Order Or Disorder

Section: Chapter Questions

Problem 8DQ

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