Exam 4 - Short Answers(3 points each 1 What are the...

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Short Answers (3 points each) 1. What are the downsides of currency controls (e.g. exchange controls)? Briefly list two of them. 2. How did GE save money by bringing production of the GeoSpring back to the U.S. from China? 3. How is outward FDI costly to a country (name two ways)? 4. What was the Maastricht treaty? 5. Why did covered interest parity break down in 2008 (hint: there were no capital controls to prevent firms/bank from moving money around, so it was not that)?
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6. Why do sovereign debtors ever repay their loans? (What are the two costs of not paying for them?) 7. What is the Montreal Protocol? Name two factors for why it worked where other such agreements failed? 8. Who was Hernando de Soto (hint: from Commanding Heights video)? 9. The majority of exports from Developing countries are (check one): _________Nonfuel Primary products (e.g. commodities)___________Fuels (oil, coal, etc.)______________Manufactures (2pts) 10. Which of the following is true? (2pts) ________More educated immigrants are more costly for the recipient country than less educated immigrants ________Less educated immigrants are more costly for the recipient country than more educated immigrants ________Less and more education immigrants are equally costly for the recipient country 11. If the world production of a good (made abroad and domestically) caused pollution and no other country would cooperate, what policy or policies would you recommend we enact? (2pts)/choose only one _______Tax our production
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_______Tax our consumption _______Tax imports and consumption _______Tax imports and production Assessing Changes in Currency Values (6 points) In Argentina, the spot rate (e ) declines for purchase of Brazilian Real. What is the effect on the following (again, to be clear e is from the Argentina perspective): Inflation in Argentina (increase/decrease/no change) Tuition bill in Brazilian Reals for a Brazilian Student in Argentina (billed in Argentina Pesos) (increase/decrease/no change) Cost of future Brazilian FDI into Argentina increase/decrease/no change) Value of current Argentina FDI in Brazil (increase/decrease/no change) Quantity of imports into Argentina
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