Questions and Answers of International Macroeconomics

Using the central bank balance sheet diagrams, evaluate how each of the following shocks affects a country’s ability to defend a fixed exchange rate. In the following answers, we assume the central
Consider the central bank balance sheet for the country of Riqueza. Riqueza currently has 2,000 million escudos in its money supply, 1,200 million escudos of which is backed by domestic government
The government of the Republic of Andea is currently pegging the Andean peso to the dollar at E = 1 peso per dollar. Assume the following:In year 1 the money supply M is 2,700 pesos, reserves R are
The data in Figure 1-1(12-1) end in 2015. Visit https://research.stlouisfed.org/fred2/series/DEXCHUS and https://research.stlouisfed.org/fred2/series/DESUSEU (or another site with daily exchange rate
The charts below show the growth of real GDP per capita in three pairs of geographically adjacent countries: North and South Korea, Argentina and Chile, Zimbabwe and Botswana (using data from the
Visit the Financial Times website to download data for country risk today. You may need to download the most recent daily report (pdf) for interest rates, and look for the table containing high-yield
Refer to the exchange rates given in the following table:Based on the table provided, answer the following questions:a. Compute the U.S. dollar–yen exchange rate E$/¥ and the U.S.
Suppose quotes for the dollar–euro exchange rate E$/€ are as follows: in New York $1.05 per euro, and in Tokyo $1.15 per euro. Describe how investors use arbitrage to take advantage of the
In recent years China has been routinely accused of currency manipulation. Use The Economist’s Big Mac Index to investigate these claims. Go to http://www.economist.com/content/big-mac-index to
Table 3-1(14-1) in the text shows the percentage undervaluation or overvaluation in the Big Mac, based on exchange rates in January 2016. The table that follows shows the local currency price as well
This question asks you to compute valuation effects for the United States in 2015 using the same methods mentioned in the chapter. Use the bea.gov website to collect the data needed for this
This question explores IS and FX equilibria in a numerical example.a. The consumption function is C = 1.5 + 0.8(Y – T). What is the marginal propensity to consume? What is the marginal propensity