One point each.Do not cut and paste, use only the Suranovic reader and reference it appropriately.

1. Why does the GDP rise after disasters?

2. Explain the difference between the current account and the merchandise trade deficit.

3. What is the relationship between trade deficits and employment?

4. What is the relationship between exchange rates and foreign direct investment?Explain with regard to currency risk faced by foreign direct investment.

5. Explain how profits can be made using interest rate arbitrage.

6.Briefly explain the idea of interest rate parity.

7. & 8. Assume the following prices for a 500 gram load of whole wheat bread, equivalent in every functional way:

Morocco:6 Dirhams0.67 USD

France: 1.99 Euros2.44 USD

Which currency is over valued using this bread load index?Explain the concept of purchasing power parity.

9.How do markets set interest rates?

10.What are the ways with which national output can increase?

11. What are the elements of the AA-DD model?

12. Why do governments intervene in floating exchange rate markets?

13. How can Central Banks embark on expansionary monetary policy?

14.How does fiscal policy impact exchange rates?

15.How do fixed exchange rates work in theory?

16. Why do foreign exchange black markets emerge under fixed exchange systems?

17. & 18.Explain the collapse of the Bretton Woods System in 1973.Why did the system collapse?Wasthe US correct in letting it collapse?

19.Why do countries get embroiled in currency crisis?Use one an example in your answer.

20. Is it wise to attack monetary autonomy politically?