Do pulp and paper investment and cross border shopping respond
differently to fluctuations in exchange rates? Why or why not?
What other industries or behaviours might respond to changes in
the exchange rate? How will they respond?
Who gains and who loses from appreciations in the Canadian
dollar?
In cross border trades,it is likely to make (incur)foreign
exchange gains (losses)due to foreign currency fluctuation . How
would you describe this scenario?
Consider and describe how interest rates and exchange rates impact
foreign direct investment and foreign exchange money flows. Comment
on PEG, Free Floating System, etc.
According to the simple monetary model of exchange rates, on
what do exchange rates depend? What is the effect of a monetary
contraction on exchange rates? How does this change if goods market
prices are slow to adjust?
Consider the following exchange rates:
1. $1.645/BP
2. $0.875/SGD What should be the cross exchange in SGD/BP? If
the market exchange change is SGD1.92/BP and you have US$100,000 to
invest, is that an arbitrage opportunity? If yes, what transaction
will you be and what will be the arbitrage profit?
2. How do the fluctuations in the exchange rate influence the
domestic price level?
3. What is a barter system? The drawbacks of this system are as
follows:
4. Why is comparative advantage rather than absolute advantage
the basis for trade?
5. Explain the concept of “lender of last resort.” What is
discount rate?