Financial markets

Question One: (10 Marks) a) Interpret the effect on the Egyptian pound of an increase in import barriers in Egypt. (2 Marks) b) Interpret the effect on the Egyptian pound of lower productivity of traded goods in Egypt. (2 Marks) c) Interpret the effect on the Egyptian exchange rate of an increase in Foreign interest rates. Graphical illustration is required. (3 Marks) d) For the Theory of Purchasing Power Parity to hold, what must happen to the currency of a nation that encounters an increase in prices of its commodities and why? Give an Example