Question

(scenario: gizmovia look at the scenario gizmovia. if gizmovia uses monetary policy to bring the exchange rate for the gizmo to $0.50, it should _____ interest rates, which will _____ capital inflows of gizmos.

Answer 1

If Gizmovia uses monetary policy to bring the exchange rate for the gizmo to $0.50, it should increase interest rates, which will increase capital inflows of Gizmos. The following answers to the missing blanks are the increase and increase respectively.