Problem 1
How will a stronger euro affect the following economic agents? a. A British exporter to Germany. b. A Dutch tourist visiting Chile. c. A Greek bank investing in a Canadian government bond. d. A French exporter to Germany.
Problem 3
Suppose U.S. interest rates decline compared to the rest of the world. What would be the likely impact on the demand for dollars, supply of dollars, and exchange rate for dollars compared to, say, euros?
Problem 4
Suppose Argentina gets inflation under control and the Argentine inflation rate decreases substantially. What would likely happen to the demand for Argentine pesos, the supply of Argentine pesos, and the peso/U.S. dollar exchange rate?
Problem 7
How would a contractionary monetary policy affect the exchange rate, net exports, aggregate demand, and aggregate supply?
Problem 10
What is the foreign exchange market?
Problem 12
What is the difference between foreign direct investment and portfolio investment?
Problem 13
What does it mean to hedge a financial transaction?
Problem 14
What does it mean to say that a currency appreciates? Depreciates? Becomes stronger? Becomes weaker?
Problem 15
Does an expectation of a stronger exchange rate in the future affect the exchange rate in the present? If so, how?
Problem 16
Does a higher rate of return in a nation's economy, all other things being equal, affect the exchange rate of its currency? If so, how?