final2 - Economics/Finance 431/531 Ruxandra Prodan Final...

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Economics/Finance 431/531 International Finance Ruxandra Prodan Spring 2005 Final Part 1 Part 2 1.(30 points) Short answer questions (explain where necessary): a. Why would you suggest to a government to use a floating exchange-rate regime? b. Why would you suggest to a government NOT to use a floating exchange-rate policy?
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c. How did countries use their policy tools to regain internal and external balance after the first oil shock of 1973? d. What is the political economy trilemma? e. Explain the causes of the U.S. Savings and Loans crisis of the early 1980s.
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f. Why is it useful to make a distinction between debt and equity instruments? 2.(20 points) Use the DD – AA model to examine and compare the response of an economy under fixed and floating exchange-rate regimes to a temporary and permanent fall in foreign demand for its exports.
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3.(24 points) Suppose that the voters of Quebec are to decide whether to keep the Canadian dollar as their currency or instead to establish a new currency called the
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This note was uploaded on 04/14/2010 for the course ECON 351-451 taught by Professor Prodan during the Spring '10 term at University of Alabama - Huntsville.

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final2 - Economics/Finance 431/531 Ruxandra Prodan Final...

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