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How much is the monetary base of the nation? What is the value of the money multiplier? What is the value of the total supply of money of the nation?
How does a deficit or a surplus in the nation's balance of payments arise according to the monetary approach?
What is demand for money according to the monetary approach to the balance of payments? What is the supply of money of the nation?
What is the relative purchasing-power parity theory? Do empirical tests confirm or reject the relative purchasing-power parity theory?
What is the purchasing-power parity theory? What are its uses? What is the absolute purchasing-power parity theory? Why is this not acceptable?
Which are the modern and the traditional exchange rate theories? What distinguishes them? What is the relevance of each?
Explain why even when CIAP holds, investors in different monetary centers do not necessarily receive the same returns on their financial investments.
How much would an interest arbitrageur earn from the purchase of foreign three-month treasury bills if he or she covered the foreign exchange risk?
How can a person speculate in the forward market? How much will the speculator earn if he or she is correct?
Assume that SR = $2/£1 and the three-month FR = $1.96/£1. How can an importer who will have to pay £10,000 in three months hedge the foreign exchange risk?
What is the difference between Eurocurrencies on the one hand and Eurobonds and Euronotes on the other?
(a) Are Eurocurrencies money? (b) Do Euro banks create money? (c) What are the most serious problems created by the existence of Eurocurrencies?
Why is the spread between lending and borrowing rates lower on Eurocurrencies than on commercial bank dollar deposits in the United States?
What is meant by the foreign currency being at covered interest arbitrage parity (CIAP)? What are some of the forces that can prevent the achievement of CIAP?
How is interest arbitrage covered in forward market? Why does net gain from covered interest arbitrage tend to diminish as covered interest arbitrage continues?
Why does speculation not usually take place in the spot market? What is stabilizing speculation? destabilizing speculation?
How can foreign exchange risks be covered in the spot, forward, futures, or options markets? Why does hedging not usually take place in the spot market?
What is meant by a forward discount? forward premium? What is a currency swap? What is a foreign exchange futures? a foreign exchange option?
Why is the measure of the balance-of-payments deficit or surplus not strictly appropriate under a flexible exchange rate?
What is meant by a depreciation of the domestic currency? an appreciation? What is the cross exchange rate? What is the effective exchange rate?
What is meant by the international investment position of a nation, or its balance of international indebtedness?
What are the most serious pitfalls to avoid in analyzing a nation's balance of payments or statements of international transactions?
How is an official settlements deficit or surplus measured? What was the size of the U.S. balance of payments in 2011?
What is meant by the autonomous transactions? Accommodating transactions? Which items does the official reserve account include?