Author Question: When domestic and foreign currency bonds are imperfect substitutes, the domestic interest rate (R) ... (Read 139 times)

Haya94 · **on:** Jun 30, 2018

When domestic and foreign currency bonds are imperfect substitutes, the domestic interest rate (R) can be written as

A) R = R - (Ee - E)/E + .
B) R = R - (Ee - E)/E.
C) R = R + (Ee - E)/E + .
D) R = R - (Ee + E)/E + .
E) R = R - (Ee - E).

Question 2

Currently the NAFTA nations do not meet the conditions for an optimal currency area. What are the two main reasons why?

What will be an ideal response?

dpost18 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

C

Answer to Question 2

Historically Mexico's business cycle has not been correlated with the cycles in the United States and Canada; labor mobility is limited.