STUDY QUESTIONS: Chapter 11 Question 8: Distinguish between stabilizing speculation and destabilizing speculation. Question 9: If the exchange rate changes from $1.70 = (₤1) to $1.68 = ₤1, what does

STUDY QUESTIONS:

Chapter 11

Question 8:

Distinguish between stabilizing speculation and destabilizing speculation.

Question 9:

If the exchange rate changes from $1.70 = (₤1) to $1.68 = ₤1, what does this mean for the dollar?  For the pound? What if the exchange rate changes from $1.70 = (₤1) to $1.72= ₤1?

Chapter 12

Question 2:

Why are international investors especially concerned about the real interest rate as opposed to the nominal rate?

Question 6:

What factors underlie changes in a currency’s value in the short run?

Chapter 15

Question 1:

Distinguish among external balance, internal balance, and overall balance.

Question 5:

Under a system of fixed exchange rates and high capital mobility, is monetary policy or fiscal policy better suited for promoting internal balance? Why?

Question 7:

What are some obstacles to successful international economic policy coordination?