f07 ec51 ps8

f07 ec51 ps8 - Economics 51D 8 November 2007 Could it be?...

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Economics 51D 8 November 2007 Could it be? LAST PROBLEM SET 1. Read the December 21, 2006 Wall Street Journal Article “Embrace the Deficit” by David Malpass. This article gives a very different interpretation of the cause of the US’ current account deficit. A. According to the article, what is actually driving the US current account deficit? B. Using graphs (you’ll need at least 2), illustrate Malpass’ argument and show how the current account deficit is caused by the source you identified in Part A. C. Malpass also makes the comment that “…it took a recession to create our last trade surplus in 1990-91.” According to this article, how could that work? 2. The November 1, 2007 Wall Street Journal Article “Flood of Money Strains Hong Kong’s Dollar Peg” discusses whether the Hong Kong Monetary Authority (HKMA) will be able to maintain a pegged, or fixed, exchange rate with the US Dollar (USD). A. What is the cause of the money flowing into Hong Kong? B. What would happen to the USD price of the Hong Kong Dollar (HKD) if the government of Hong Kong takes no action? Show and explain what the HKMA is actually doing to hold the
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This note was uploaded on 03/31/2009 for the course ECON 5161 taught by Professor Fullenkampf during the Fall '07 term at Duke.

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f07 ec51 ps8 - Economics 51D 8 November 2007 Could it be?...

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