Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.

Also, provide a graduate-level response to each of the following questions:

How Can Persistently Weak Currencies Be Stabilized?

Point: The currencies of some Latin American countries depreciate against the U.S. dollar on a consistent basis. The governments of these countries could attract more capital flows by raising interest rates and making their currencies more attractive. They also could insure bank deposits so that foreign investors who invest in large bank deposits do not need to worry about default risk. In addition, they could impose capital restrictions on local investors to prevent capital outflows.

Counter-Point: Some Latin American countries have had high inflation, which encourages local firms and consumers to purchase products from the U.S. instead. By reducing inflation, these countries could relieve the downward pressure on their local currencies. To reduce inflation, a country may have to reduce its economic growth temporarily. These countries should not raise their interest rates in an attempt to attract foreign investment, because they will still not attract funds if investors fear that large capital outflows will occur at the first threat of continued depreciation.

Who is Correct? Use the Internet to learn more about this issue. Which argument do you support? Offer your own opinion on this issue.