ECON 4351 Fall 2019 H5.pdf - ECON 4351 International Monetary Theory Policy Fall 2019 Dr Smith Homework 5 1 2 3 4 Provide concise explanations of the

ECON 4351 Fall 2019 H5.pdf - ECON 4351 International...

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ECON 4351 Fall 2019 International Monetary Theory & Policy Dr. Smith Homework 5 1. Provide concise explanations of the following concepts. a. The Trilemma of International Macroeconomics b. Overshooting 2. True or False. ( Explain your answers.) a. If capital is perfectly mobile and a country has a fixed exchange rate it can pursue autonomous monetary policy. c. If the exchange rate is fixed and capital is perfectly mobile (so that UIP holds), then the domestic interest rate must be equal to the foreign interest rate. (Hint: Does it matter whether the market doubts the intention of the central bank to maintain the peg? Use UIP.) 3. Suppose that an improvement in banking technology reduces the demand for money (in other words,
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