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Suppose that Russia decided to increase interest rates by %2.  Considering the inflation and interest differential between the US and Russia, what is likely to happen to real exchange rate in Russia? Explain with this formula iRuble− idollar = π  − π *

Suppose that Russia decided to increase interest rates by %2.  Considering the inflation and interest differential between the US and Russia, what is likely to happen to real exchange rate in Russia? Explain with this formula iRuble− idollar = π  − π *

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter29: Exchange Rates And International Capital Flows
Section: Chapter Questions
Problem 3SCQ: Suppose U.S. interest rates decline compared to the rest of the world. What would be the likely...
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Suppose that Russia decided to increase interest rates by %2. 

Considering the inflation and interest differential between the US and Russia, what is likely to happen to real exchange rate in Russia?

Explain with this formula iRuble− idollar = π  − π *

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