STUDY QUESTIONS:
Chapter 11
Question 8:
Distinguish between stabilizing speculation and destabilizing speculation.
Question 9:
If the exchange rate changes from $1.70 = (₤1) to $1.68 = ₤1, what does this mean for the dollar? For the pound? What if the exchange rate changes from $1.70 = (₤1) to $1.72= ₤1?
Chapter 12
Question 2:
Why are international investors especially concerned about the real interest rate as opposed to the nominal rate?
Question 6:
What factors underlie changes in a currency’s value in the short run?
Chapter 15
Question 1:
Distinguish among external balance, internal balance, and overall balance.
Question 5:
Under a system of fixed exchange rates and high capital mobility, is monetary policy or fiscal policy better suited for promoting internal balance? Why?
Question 7:
What are some obstacles to successful international economic policy coordination?