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Please answer all questions and support your answers by showing your calculations and graphs (if required) for questions marked with (*). Correct answers without such

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Please answer all questions and support your answers by showing your calculations and graphs (if required) for questions marked with (*). Correct answers without such supports will not receive any credit n-days 360 Formulas : %S11- ; Forward Primum/discount for S, 113 Points] Consider the flow theory of exchange rate determination. (a) Explain the role of activities of each account of balance of payment accounts in shaping demands for and supplies of currencies in foreign exchange market. 2* I3 Points] According to flow theory, explain how each one of the following changes affect the value of dollar vis--vis euro, S? (Support each answers with a separate graph) GRAPH 1 a) A Decrease in U.S. real income

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