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Why might covered interest parity fail to hold when deposits issued in different financial centers are compared?
Under which exchange rate regime would the gains from international asset trade be greater, fixed or floating?
Movements in the euro's external exchange rate can be seen as goods-market shocks. What would have happened had Spain retained its old currency, the peseta?
Find macro data on the British economy's performance since 1998 (inflation, unemployment, real GDP growth) and compare these with euro zone data.
Why would the failure to create a unified EU labor market be particularly harmful to the prospects for a smoothly functioning EMU?
Imagine instead that the task had been left to the various national central banks. What problems can you see arising from such a scheme?
In what way might ERM membership have gained credibility for British policy makers? (Britain entered the ERM in October 1990)
How an increase in the size and frequency of unexpected shifts in a country's money demand function affects the level of economic integration.
What happens to the exchange rate of the Norwegian krone against noneuro currencies?
What would have been the maximum possible difference between the interest rates on six-month lira and DM deposits? On three-month deposits?
What is a demand for a productive resource, which is derived from the demand for the goods and services produced from that resource.
Why might EMS provisions for the extension of central bank credits from strong- to weak-currency members have increased the stability of EMS exchange rates?
Show that this action would be equivalent to a huge sterilized sale of dollars in the foreign exchange market. What might be the effects?
Question 1: Why does asymmetric information limit contracts from solving incentive conflicts?
Put together data on the U.S. real interest rate for 1970-1976, a period that includes the first OPEC oil shock. How did the U.S. real interest rate behave?
Which exchange rate regime minimizes the effect on output-fixed or floating?
how such a revaluation crisis or inflow attack might operate when the government (like Germany's at the time) is highly fearful of inflation?
Macroeconomics, explain why changes could occur in supply, demand, and price.
How might restrictions on private financial account transactions alter the problem of attaining internal and external balance with a fixed exchange rate?
Question: Analyze the current market conditions for the Xerox corp by addressing the price elasticity of demand for the company.
What is the effect on its foreign reserve holdings? On its money supply? Can it offset either of these effects through domestic open-market operations?
With a fixed exchange rate, there is thus no way of keeping wages and prices down. What is wrong with this argument?
Draw out multiple demand graphs and identify and explain and affect on quantity and price:
Why can the same problem arise under a reserve currency standard when bonds denominated in different currencies are all perfect substitutes?
Where does cross-price elasticity information become more important, in a competitive industry with a lot of sellers