Exchange rate and the balance of payments - Back to IS-LM: enter the FE curve

5 important questions on Exchange rate and the balance of payments - Back to IS-LM: enter the FE curve

What, considering the central bank, is a vital condition for an foreign exchange market equilibrium?

OR = 0

What is the equation for the Current Account Equilibrium?

Y = x1YWorld/m1 + ( R(x2 + m2) / m1 )

On what kind of line do alle the points balancing the current account lie in the i-Y plane?

A vertical one
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What is the formula for the capital account determined by the interest differential?

CP = k(i-iWorld)

To what position does the FE curve rotate when the capital mobility gets very large?

To a horizontal line i=iWorld

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