1. Explain the difference between the real exchange rate and the purchasing power parity (PPP) exchange rate, and discuss a situation in which you would use each of these different exchange rates.
2. If the financial account balance must exactly offset the current account balance, why do government accounts bother to record the financial account?
3. Your business is expected to generate a S60,000 profit at the end of year 1, and profit will increase by 9% per year through year 10 . If you can earn 7% annual interest compounded annually, what is the present value of all your profits over the next 10 years?