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Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884 Exercise 38
Use the following news clip to work Problem.
Indian Entrepreneur Seeks Opportunities
Rahul Reddy, an Indian real estate entrepreneur, believes that "The United States is good for speculative higher-risk investments." He profited from earlier investment in Australia and a strong Australian dollar provided him with the funds to enter the U.S. real estate market at prices that he believed "we will probably not see for a long time." He said, "The United States is an economic powerhouse that I think will recover, and if the exchange rate goes back to what it was a few years ago, we will benefit."
Based on an article in Forbes, July 10, 2008
Explain what would happen if the speculation made by Mr. Reddy became widespread. Would expectations become self-fulfilling?
Indian Entrepreneur Seeks Opportunities
Rahul Reddy, an Indian real estate entrepreneur, believes that "The United States is good for speculative higher-risk investments." He profited from earlier investment in Australia and a strong Australian dollar provided him with the funds to enter the U.S. real estate market at prices that he believed "we will probably not see for a long time." He said, "The United States is an economic powerhouse that I think will recover, and if the exchange rate goes back to what it was a few years ago, we will benefit."
Based on an article in Forbes, July 10, 2008
Explain what would happen if the speculation made by Mr. Reddy became widespread. Would expectations become self-fulfilling?
Explanation
Verified
Verified
Speculation in exchange rate market:
Co...
Macroeconomics 11th Edition by Michael Parkin
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