1) Large current account deficits imply large financial account surpluses. True Or False?Explain.

Brief Principles of Macroeconomics (MindTap Course List)
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Chapter14: A Macroeconomic Theory Of The Open Economy
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1) Large current account deficits imply large financial account surpluses.
True Or False?Explain.
2) The longer the "pass-through" period following a devaluation, the faster
the desirable balance of trade effects of a devaluation will appear on
quantities traded. True or False? Explain.
3) Suppose we observe the following 1-year interest rates:
į Turkey = 10%
į USA = 2%
The exchange rate is quoted as theTL price of dollars and is
currently E = 6.0 TL
Given the information above, what is the 12-month forward
rate?
4) How is the balance of payments linked to national saving and
investment? Explain.
Transcribed Image Text:1) Large current account deficits imply large financial account surpluses. True Or False?Explain. 2) The longer the "pass-through" period following a devaluation, the faster the desirable balance of trade effects of a devaluation will appear on quantities traded. True or False? Explain. 3) Suppose we observe the following 1-year interest rates: į Turkey = 10% į USA = 2% The exchange rate is quoted as theTL price of dollars and is currently E = 6.0 TL Given the information above, what is the 12-month forward rate? 4) How is the balance of payments linked to national saving and investment? Explain.
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