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Illustrate the pattern of trade and the gains from trade between the North and South with a production possibilities frontier for each region.
Illustrate international excess supply and demand when international price is $475, the volume of trade 100, US production 100 and Venezuelan production 300.
Show what will happen in the international market for business services if foreign nations increase their demand for US business services.
If you are traveling to Europe in six months and you believe the Euro is going to appreciate against the American dollar
Compile a report on the country of Germany including the following financial concepts. 1. Currency (stability)
Describe the major components of the monetary system, including organizations and financial institutions.
For the coming year, inflation in Brazil is expected to be 15% while the US inflation is expected to be 3%. Spot Brazil Real is 2.86 BRL/USD.
Consumer Reports. You want to buy a used car, specifically a 1999 Zephyr. What is the fundamental difference between the two markets?
Which would have prevented the government from spending money on imported goods.
The chapter's discussion of Inflation Bias and Other Problems. How would these considerations affect the exchange rate and output effects of fiscal policy?
Suppose that interest parity does not hold exactly, but that true relationship is R = R*+(Ee - E)/E+?. Evaluate the policy's output effects in this situation.
How would you draw the DD-AA diagram when the current account's response to exchange rate changes follows a J-curve?
You observe that a country's currency depreciates while its account worsens. What data might you look at to decide whether you are witnessing a J-curve effect?
Would you still expect the tax cut to cause a currency appreciation?
Why does a temporary increase in government spending cause the current account to fall by a smaller amount than does permanent increase in government spending?
Suppose there is permanent fall in private aggregate demand for country's output. What is effect on output? What government policy response would you recommend?
Why does the constitutional amendment imply that the government can no longer use fiscal policy to affect employment and output?
Suppose the government imposes a tariff on all imports. Use the DD-AA model to analyze the effects this measure would have on the economy.
Why might it be true that relative PPP holds better in the long run than the short run?
In terms of the Fisher effect, what would that pattern say about expected inflation and/or the expected future real interest rate?
What happens to the expected real interest rate? Explain why the subsequent path of the real exchange rate satisfies the real interest parity condition.
Explain how the nominal dollar/euro exchange rate would be affected by permanent changes in the expected rate of real depreciation of the dollar against euro.
Where should the demand expansion cause a greater real currency appreciation, in the tariff-using country or in the quota-using country?
How does this action change the long-run real exchange rate between the home and foreign currencies? How is the long-run nominal exchange rate affected?
Continuing with the preceding problem, discuss how the transfer would affect the long-run nominal exchange rate between the two currencies.