This assignment requires that you answer the following 2 questions. Your posting should be at least 150 words. Your posting is graded based upon your ability to relate the courses material to the topic under discussion, the level to which you support your point with specific examples and your writing.

  1. Explain the logic underlying the law of one price and the theory of purchasing power parity.
  2. How will a decrease in the federal government’s budget deficit affect the equilibrium interest rate in the bond market? Explain using the bond demand and supply framework.
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