Review_Questions_Chapters_12_%26_13

Review_Questions_Chapters_12_%26_13 - ECMC61 International...

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ECMC61 – International Economics: Finance Review Questions – Chapters 12 & 13 Chapter 12 Question 1: Chapter 12, Problems #6. Can you think of reasons why a government might be concerned about a large current account deficit or surplus? Why might a government be concerned about its official settlements balance (that is, its balance of payments)? Question 2: Chapter 12, Problems #8. Is it possible for a country to have a current account deficit at the same time it has a surplus in its balance of payments? Explain your answer, using hypothetical figures for the current and nonreserve financial accounts. Be sure to discuss the possible implications for official international reserve flows Chapter 13 Question 1: Chapter 13, Problems #6. Suppose the dollar interest rate and the pound sterling interest rare are the same, 5 percent per year, What is relation between the current equilibrium $/£ exchange rate and its expected future level? Suppose the expected future $/£ exchange rate, $1.52 per pound,
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