Econ 434: international finance and open economy macro
ECON 434: International Finance and Open Economy Macro Problem set 1 I. The FX Market 1. Suppose quotes for the dollareuro exchange rate, E$=AC, are as follows: in New York, $1.50 per euro; and in Tokyo, $1.55 per euro. Describe how investors use arbitrage to take advantage of the dierence in exchange rates. Explain how this process will aect the dollar price of the euro […]