1. How can exchange-rate targets lead to a speculative attack on a currency?

2.For each of the following, identify whether theyincreaseordecreasethe current account balance:

a) An American citizen's purchase of an airline ticket from Air France

b) A Japanese citizen's purchase of California oranges

c) $50 million of foreign aid to Honduras

d) A worker in California who sends money to his parents in Mexico

e) The services an American accounting firm provides to a German firm

3. Calculate:

A) A German sports car is selling for 70,000 euros. What is the dollar price in the United States of the German car if the exchange rate is 0.90 euro per dollar?

B) If the Canadian dollar to U.S. dollar exchange rate is 1.28 and the British pound to U.S. dollar exchange rate is 0.62, what must be the Canadian dollar to British pound exchange rate?

4. What do you think prevented the financial crisis of 2007-2009 from becoming a depression?

5. If junk bonds are "junk," then why do some investors buy them?