1. Exchange-rate regimes: Explain why a fixed exchange rate policy can be inconsistent with the goal of price stability. 2. Gains from international trade in assets \"The gains from trade for a country arising from international lending or borrowing are greatest when world interest rates are either very high or very low (relative to the equilibrium interest rate in autarky).\" Evaluate this claim using a diagram with households' indifference curves in the two-period model. 3. Twin deficits: In a small open economy with perfect capital mobility, use the two-period consumption choice model to explain why a failure of Ricardian equivalence (for example, owing to households facing a binding limit on borrowing) is required to understand why a tax cut that increases the government's budget deficit causes an increased current-account deficit the phenomenon of 'twin deficits'. 4. Sovereign default: \"A country is better off if the penalty for defaulting on its foreign debts is low.\" Evaluate this statement using the model of sovereign default, considering a reduction in the penalty v after default