Describe the normal reasons why a currency undergoes asignificant depreciation and what were the importantcharacteristics of the Asian countries involved in the crisis?
What are some expected domestic economic consequences of thecurrency crisis for the countries involved? Focus on:
import prices of goods and services into the Asiancountry.
export prices of goods and services from the Asiancountry.
Domestic inflation rates.
Assume that the countries involved undertake a tight monetarypolicy and raise interest rates in response to the crisis. What arethe two primary reasons for raising interest rates in theircase?
Given high domestic interest rates, what is the economicoutlook for these Asian countries in the next few years?