ECON 219 Lecture Notes - Lecture 5: Canadian Dollar, Optimum Currency Area, Special Drawing Rights

• School: McGill University
• Department: Economics
• Course: ECON 219
• Professor: Tom Velk

Document Summary

Money lows in when up interest rate domesically is higher than baseline world interest rate (cid:1) Stock adjustment money would low in for a while unil rest of the world is (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) adjusing to take on more exposure (cid:1) Money lows in the world in order to equalize prices. Weak on trade and capital low side both side. Restrict outputs and damage the rest of the world. Inelasic demand consumer will pay any price to get the good 100 dollars vs. 3 dollars for something unil max revenue elasicity above 1:1 (cid:1) Income internaional markets interest rate related manipulate monetary policy paricular investments (cid:1) Internaional real interest rate separate internal interest rate by means of monetary policy (cid:1) Real exchange rate (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) Consequences of open markets are not producive as they could be.