(c) Use the following information to prepare a balance of payments account and find out how much are the current account balance, financial account balance and the statistical discrepancy. Assume that the balance on the capital account is zero. Exports of goods $825 Increase in foreign holdings of assets in the United States 2,450 Income payments on investments Net transfers -75 Exports of services 623 Imports of goods 1.111 Increase in U.S. holdings of assets in foreign countries 2,368 Income received on investments 502 Imports of services 456 7. What is the difference between the nominal exchange rate and the real exchange rate? a) What is the Law of One Price or Purchasing Power Parity (PPP)? (b) What are the three main exchange rate systems, and how do they operate? Which kind of foreign exchange rate regime are we in? (e) Why might a developing country choose to peg the value of its currency to the dollar 8. How does in increase in government spending financed by an increase in the deficit affect the nominal exchange rates? (a) How is the impact of expansionary fiscal policy different in an open economy than in a closed economy? (b) How is the impact of expansionary monetary policy different in an open economy than in a closed economy? (c) Use the following information to prepare a balance of payments account and find out how much are the current account balance, financial account balance and the statistical discrepancy. Assume that the balance on the capital account is zero. Exports of goods $825 Increase in foreign holdings of assets in the United States 2,450 Income payments on investments Net transfers -75 Exports of services 623 Imports of goods 1.111 Increase in U.S. holdings of assets in foreign countries 2,368 Income received on investments 502 Imports of services 456 7. What is the difference between the nominal exchange rate and the real exchange rate? a) What is the Law of One Price or Purchasing Power Parity (PPP)? (b) What are the three main exchange rate systems, and how do they operate? Which kind of foreign exchange rate regime are we in? (e) Why might a developing country choose to peg the value of its currency to the dollar 8. How does in increase in government spending financed by an increase in the deficit affect the nominal exchange rates? (a) How is the impact of expansionary fiscal policy different in an open economy than in a closed economy? (b) How is the impact of expansionary monetary policy different in an open economy than in a closed economy