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What would be the drain on U.S. GDP (as a percentage) from paying interest on the net foreign debt? Do you think this is a large number?
Why might a government be concerned about its official settlements balance (that is, its balance of payments)?
What was the balance of payments of Pecunia in that year? What happened to the muntry's net foreign assets?
How would these transactions show up in the balance of payments accounts of New York and Ncw Jersey? What if the Ncw Yorker pays cash for the machine?
Why should the measure of imports used in the GNP accounts therefore be defined to include only imports of final goods and services from abroad?
Plot the inflation rate of Canada, France, Germany, Italy, Japan, and the United Kingdom against the United States inflation rate.
What would the interest rate be if you were required to repay the loan in 12 equal monthly installments?
Nominal tariff rates in industrial countries commonly increase with the stage of processing. Why exactly do LDCs object to such a tariff structure?
Which strategy do you favor? What factors are likely to limit the success of import substitution and of export promotion?
What interest groups within the United States would you expect to support a US policy of allowing product to be imported from emerging industrialized countries.
If a country does nothing to eliminate pollution, why does that usually result in a loss in economic efficiency? Is there a correct level of pollution to allow?
How successful would that strategy be in preventing global warming? In what sense is the earth's atmosphere a common property resource?
If all European countries agree to levy an identical tax on the income earned by foreign capital, what are the consequences of the policy likely to be?
Explain why both a foreign asset acquired and a foreign liability reduced give rise to a debit entry in a nation's balance of payments.
Distinguish between autonomous and accommodating transactions in the balance of payments. What is the purpose of the distinction?
What would you expect to happen to Malaysia's recorded current account results in the next year or so? Why?
If silver were substituted for gold in this fixed exchange rate regime, what would happen to the band within which exchange rates could move? Why?
How exactly can you use the forward exchange market to protect yourself against exchange rate risk?
If the spot exchange rate is $0.50 = DM 1.00, what should be the forward exchange rate? Explain why.
What does that imply about the markets expectations with regard to US and Japanese inflation? Why?
What factors would cause the premium or price of a 6-month sterling put option with a given strike price to rise from 1 cent to 3 cents?
What is the effect of a balance-of-payments surplus on a country's domestic money supply? How does this effect occur?
Why is the role of the terms of trade in current account determination of more concern to small developing countries than to larger developed countries?
Why is sterilization more difficult for a central bank when its country has a payments surplus than when it has a deficit?
What happens to the balance of payments of Country A? Why? How is it returned to equilibrium? What is the effect of this process on the rest of the world?