Suppose the central bank of a small country is faced by a rise in the world interest

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Suppose the central bank of a small country is faced by a rise in the world interest rate, R* what is the effect on its foreign reserve holdings? On its money supply? Can it offset either of these effects through domestic open-market operations?

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International Economics Theory and Policy

ISBN: 978-0273754206

9th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Question Posted: Oct 24, 2012 11:47 PM

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Suppose the central bank of a small country is faced by a rise in the world interest

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An increase in the world interest rate leads to a fall in a central banks holdings of fore...View the full answer

International Economics Theory and Policy

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