21. Effects of 9/11 Why do you think the terror-ist attacks on the United States on September 11, 2001, were expected to cause a decline in U.S. interest rates? Given the expectations for a decline in U.S. interest rates and stock prices, how were capital flows between the United States and other countries likely affected?

22. International Financial Markets Walmart has established two retail outlets in the city of Shanzen, China, which has a population of 3.7 million. These massive outlets sell imported goods in addition to products produced locally. As Walmart gener-ates earnings beyond what it needs in Shanzen, it may remit those earnings back to the United States. Walmart is likely to build additional outlets in Shanzen or in other Chinese cities in the future. a. Explain how the Walmart outlets in China would use the spot market in foreign exchange. b. Explain how Walmart might use the international money markets when it is establishing other Walmart stores in Asia. c. Explain how Walmart could use the international bond market to finance the establishment of new outlets in foreign markets.

27. Direct versus Indirect Exchange Rates Assume that during this semester, the euro appreciated against the dollar. Did the direct exchange rate of the euro increase or decrease? Did the indirect exchange rate of the euro increase or decrease?