Problem Set 1 (1) If French franc devalued by 17% against the U.S. dollar, what is equivalent revaluation of the dollar against the franc? (2) If the Central Bank expects a temporary increase in USD supply in Turkey, what action it should take? Briefly discuss (3) Suppose annual inflation rates in the U.S. and Mexico are expected to be 6% and 60%, respectively, over the next several years. If the current spot rate for the Mexican peso is 5.005, then what is the best estimate of the peso's spot value in 3 years? (4) If expected inflation is 20% and the nominal required rate of return is 32%. then based on the Fisher effect, what should the real interest rate be (note: use exact calculation)? (5) What is the differerence between International Fisher Effect and Interest Parity Theorem? Briefly explain