Page:Stabilizing the dollar, Fisher, 1920.djvu/247

. 9, E] case. The larger adjustment would make no difference because the brassage limitation would prevent it from taking effect.

(b) Assumptions same as in standard case except: adjustment changed from 1% to 2% and also: brassage changed from 1% to 2% or above.

A deviation above par of 1 % would then call forth a 2% increase in the weight of the dollar. The influence of this 2% adjustment would be to decrease the index number by 2%, which influence, however, would be partly neutralized by the assumed upward tendency of 1%. The net result would be a fall of 1% which would bring the index number back to 100 at the next adjustment date. This would call for no adjustment in the next period, and the index number, being acted upon only by the upward tendency, would become 101. Thus it would continue to alternate between 100 and 101.

(c) Assumptions same as in standard case except: adjustment changed from 1% to ½%.

We find the following results:

The index number increases but never reaches 102.

(d) Conclusion as to adjustment.

We conclude that the nearer the adjustment is to