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Compute total reserves for the year 2005. Illustrate this situation on a central bank balance sheet diagram.
What is a lender of last resort and what does it do? If central bank acts as a lender of last resort under fixed exchange rate regime, why are reserves at risk?
What is a currency board? Describe the strict rules about the composition of reserves and domestic credit that apply to this type of monetary arrangement.
What happens to domestic credit? What happens to Riqueza's foreign exchange reserves? Explain the responses in the money market and the forex market.
In what ways do currency crises lead to banking crises in these countries? In what ways do banking crises spark currency crises?
How does the decision of maintaining a fixed versus floating exchange rate regime depend on a country's external wealth position?
If the peso depreciates to 1.2 pesos per dollar, what is the change in Home's external wealth in pesos?
How would this affect the value of the Latin American currencies relative to the U.S. dollar? How would this affect their external debt in local currency terms?
Discuss the potential costs and benefits of a fixed exchange rate regime in this case. Comment on fiscal discipline, seigniorage, and expected future inflation.
Illustrate how a permanent increase in India's money supply affects the money and FX markets.
Illustrate how a temporary decrease in the U.S. money supply affects the money and FX markets. Label your short-run equilibrium point B and your long-run equili
Why is having a nominal anchor important for you to achieve the inflation target? What is the drawback of using a nominal anchor?
What does dollarization imply about the exchange rate between Ecuador and United States? Why might countries experiencing hyperinflation adopt dollarization?
Compute the interest rate paid on Korean deposits. Illustrate how this increase in the money growth rate affects the money supply MK.
What is the inflation rate in Korea? In Japan? What is the expected rate of depreciation in the Korean won relative to the Japanese yen (¥)?
How much is the dollar overvalued/undervalued? What do you predict the U.S. real exchange rate with the United Kingdom will be in one year's time?
Which country in each pair experienced faster growth in GDP per capita? Which one is now richest?
Which three emerging market countries have the highest spreads on their U.S. dollar debt? Which three have the lowest?
What sorts of bartering procedures should be instituted for unions to have the capacity to make due inside associations?
Danny Dimes Donahue is a neighborhood's 9-year-old entrepreneur. Why is demand elastic or inelastic over this price range?
With reference to economic concepts covered in this course, explain why the government might want to intervene in the dairy market.
Explain the law of equimarginal utility? Explain with the help of table and graph. The response should include a reference list.
Assuming that poor and rich countries have the same production function, illustrate how the poor country will converge with the rich country.
Write an expression for the future value of the stock of external wealth in period N(WN).
Using (a) and (b), write an expression for the stock of external wealth at the end of period 1 (W1).