ECN 202

Please answer the following questions.

ECN 202 Final Assignment (Answer all with appropriate theories and graph} 1. A. Explain how nominal exchange rate a'ects real exchange rate. B. Suppose that a chocolate bar costs 20 euros in France and 30 Singaporean dollars in Singapore. If the exchange rate is 1.20 euros per Singaporean dollarS, What is the real exchange rate? 2. Suppose the economy is in recession. Policymakers estimate that aggregate demand is $10!] billion short of the amount necessary to generate the long run natural rate of output. That is, if aggregate demand were shifted to the right by $100 billion, the economy would be in long run equilibrium a. Explain the impact on the economy if the government chooses to use scal policy to stabilize the economy and the marginal propensity to consume (MPC) is given as 0.?5 with no crowding out. b. If there is a crowding out effect and investment is very sensitive to changes in the interest rate, should the government increase spending more or less than this amount? 3. Suppose, OPEC decides to cut down oil production. causing oil price to go up. a. Explain with the help of an aggregate demand and aggregate supply diagram how price level and potential level of output changes if the government does not take any policy initiatives. b. Now, suppose the government takes policy actions to bring the economy back to its potential level of output. Recommend what possible policies the government can take and explain with the help of a diagram how this will a'ect your answer in part a. 4. Explain how the following transactions affect Bangladeshi NCO? Does this transaction affect direct investment or portfolio investment? i. Pran Foods Ltd. buys stock in Amul India Private Ltd. ii. Walton buys parts from a Japanese manufacturer to use in the production of its refrigerators. iii. An US rm expands its outlets in Dhaka. iv. A Korean mutual fund buys shares of stock in Beximco. 5. Suppose that the central bank sells government bonds. Use a graph of the money market to