Question 1:
What is the purpose of the IMF and why might the IMF be called the "lender of last resort"? Discuss how three of the tools they use for establishing economic stability in a country (Do not take the answers directly out of the text. There is much more to how the IMF establishes economic stability in a country than "surveillance")?
Question 2 Choose one of the World Bank's present projects (from the website) and tell how it will benefit international trade.
Question 3 Country A has a stable currency and does substantial business with country B. The following is a history of recent exchange rates, given country A's rate is a constant 1:
Date Country B Exchange
April 1 240:1
May 1 255:1
June 1 310: 1
July 1 315: 1
What is happening here? How will a company in Country A purchase products from a company in Country B if it takes three months for the order to go thru?
Which is more conducive to international trade, the fixed or the floating exchange rate? Why?
Question 4
A: If one Euro = $1.57 and one US dollar = 45 Mexican pesos, how many euros are there is 245 Mexican pesos?
B. Explain the "Big Mac Index" and how it serves to indicate Purchasing Power Parity (PPP) among countries. (P. 331-6) An example will help.
Question 5
Why has the global capital market grown so rapidly recently? Do you expect it to continue to grow?
What are the risks that might be associated with investing in the Global Capital Market?