1) Visit the Web site of Venezuela's Central Bank and examine its foreign reserves and official settlement transactions. In a response of at least 100 words, explain how the Central Bank of Venezuela could adjust its foreign exchange reserves to try to push the black-market bolivar-dollar exchange rate closer to the official fixed exchange rate?

2) Consider the extent to which fiscal policy actions can influence the real income level of a small open economy with imperfect capital mobility and a fixed exchange rate. In a response of at least 100 words, explain how the Central Bank of Brazil could utilize its own foreign exchange reserves to prevent Brazil's sovereign wealth fund from preventing changes in the real's value in foreign exchange markets?

 

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The Central Bank of Venezuela has several tools to influence the blackmarket bolivardollar exchange ... View the full answer