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Different Currencies and Exchange Rates
Each country issues and uses its own currency, instead of using mon currency.
To keep things simple, pretend that there are only two countries.
Think of the home country as the United States and the foreign country as China.
The China nominal quantity of money, Mf, is measured in RMB. The . nominal quantity of money, M, is in Dollars.
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Different Currencies and Exchange Rates
Exchange market, on which participants trade the currency of one country for that of another.
the nominal exchange rate is the number of RMBs received for each dollar.
Let ε denote the nominal exchange rate between RMBs and dollars.
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Example: Chinese Yuan
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Different Currencies and Exchange Rates
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Different Currencies and Exchange Rates
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Purchasing-Power Parity
Sometimes countries allow their nominal exchange rates to move freely in response to market forces. These systems are called flexible exchange rates.
In other circumstances, countries try to maintain a constant nominal exchange rate with respect to another currency, often the . dollar. These systems are called fixed exchange rates.
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Purchasing-Power Parity
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Purchasing-Power Parity
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Purchasing-Power Parity
巴罗 宏观经济学现代观点 第18章 来自淘豆网www.taodocs.com转载请标明出处.