1. Explain the impact of currency appreciation on trade balance of a country.

1. Explain the effect of a global recession on trade volume and net exports of a country.

1. Identify which part of balance of payments are payment or receipts. Explain.

1. Explain the implications of an increase in real interest rate in Germany on the value of British pound.

1. Explain how a flexible exchange rate system automatically eliminates balance of payments disequilibrium. Assume a decrease in incomes.