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Consider the Russian ruble. In recent months, the value of the ruble has fallen considerably. The typical explanation for this is that political events, in the Ukraine, in particular, have made the future value of the currency difficult to predict. Show how you can demonstrate this in the foreign exchange market graph. Give the modified form of the interest parity condition that is necessary to account for this uncertainty (write out the modified equation), and show in the graph how applying the modified equation affects equilibrium.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91231799

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