Answered: Computer Science

Engineering

Computer Science

Operations Research : Applications and Algorithms

4th Edition

ISBN:9780534380588

Author:Wayne L. Winston

Publisher:Wayne L. Winston

Chapter18: Deterministic Dynamic Programming

Section: Chapter Questions

Problem 11RP

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Computer Science

If PPP holds the pound has the same purchasing power in all countries. This means that the percentage change in the real exchange rate is zero. In essence the PPP implies that the real exchange rate is fixed! With this information, write down the expression for the expected change in nominal interest rate: What is the percentage change in nominal exchange rate?

Nominal interest rate - 8 (UK) 12 (Sweden)

Real interest rates in both countries are equal..

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