The US enters a deep recession, and Real GDP falls substantially. Even so, forecasters ex- pect the

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The US enters a deep recession, and Real GDP falls substantially. Even so, forecasters ex- pect the episode to be short-lived. Assume throughout that the Fed does not respond to these developments.

(a)(20pt)What are the consequences of this recession for the interest rate in the US and for the Dollars-per-Yen ($/) nominal exchange rate?

(b)(10pt)What could the Bank of Japan do to prevent the US recession from changing the Dollars- per-Yen exchange rate? How would their policies impact the interest rate in Japan?

Posted Date: May 15, 2024 01:50 PM

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The US enters a deep recession, and Real GDP falls substantially. Even so, forecasters ex- pect the

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