1. What is the key difference between "old-fashioned" and "high tech" crises?
2. Policies to maintain fixed exchange rates fell into two categories. First, there were policies to address the excess demand or supply of the home country (official reserve transactions). Second, there were policies to change the equilibrium exchange rate (interest rate changes). Please answer the following questions with regard to the use of these policies in balance of payments crises.
a. In a balance of payments crisis, what kind of official reserve transactions will be made?
b. What are the limits of the official reserve transactions approach to resolving balance of payments crises?
c. In a balance of payments crisis, what kind of interest rate policies will be used?
d. What are the limits of the interest rate approach to resolving balance of payments crises?