Set1. Incomplete exchange rate pass-through is one reason that a country's real effective exchange rate can deviate for lengthy periods from its purchasing power equilibrium level of 100 . Discuss about this exchange rate pass-through and mention one example. [5 Marks] Set2. How can a central bank use direct intervention to change the value of a currency? Explain why a centrat bank may desire to smooth exchange rate movements of its currency. Set3. Explain some methods of reducing exposure to existing country risk, while maintaining the same amount of business within a particular country