I cannot for the life of me commit these and their effects on real rates, currency, and the BoP...... I also can't remember "traditional versus money model", and all that garabage.
Anybody know an easy way?作者: 5566 时间: 2011-7-11 19:51
Ok when the Fed lowers the interest rate, it expands the money supply which leads to currency depreciation. There are two ways I remember this:
1) Expansion of money supply leads to inflation which depreciates a currency
2) If you picture a Supply/Demand graph, if supply shifts right and demand remains constant, price will decrease.
Then I remember that expansionary fiscal policy has the opposite end effect on currency (but not necessarily opposite effects on interest rates, NX, etc)
