"A balance of trade deficit must always be offset by net capital inflows from
abroad." Agree or disagree with this statement and explain.
Suppose a Japanese firm buys a 1 year treasury bill with a face value of $10,000
today for $9400. If the value of the dollar declined from 90 to 80 yen during the year,
what rate of return does the Japanese firm earn on its investment?
Draw a supply-demand diagram of the foreign exchange market for the dollar
(valued in â€œeurosâ€ ). Show the effects of the following events on the exchange
rate. Explain your reasoning!
a) The release of data showing stronger than expected RGDP growth in Germany.