1. What effect does expansionary monetary policy (under flexible exchange rates) have on interest rates, inflation and output?
2. Monetary policy is more effective with flexible exchange rates (T OR F ) ? Please explain
3. What effect does expansionary fiscal policy (under flexible exchange rates) have on interest rates, inflation and output?
4. Fiscal policy is more effective with flexible exchange rate if capital is highly mobile? True or False, explain
5. Suppose the total value of Jame’s investment is normally distributed with the mean equal to $5, 000 and standard deviation of $1, 000. What is his Value-at-Risk (VaR) at 1% level?