International Monetary Factors
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Can you discuss at least five (international) monetary factors that influence the direction of interest rates (twin deficit, inflation, interest changes abroad, political, fiscal, foreign investors, etc.).
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This solution of 273 words identifies five international monetary factors that influence the direction of interest rates.
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Twin deficit or the federal budget deficit and the current account deficit affect interest rate in that to fund the deficit the government sells sovereign debt which then increases interest rate and to pay the bonds the government sells now, it will need to issue debt again which continues the vicious cycle.
Inflation rate affects the real interest rate. The real ...
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