Suppose domestic residents of France purchase 1.2 trillion euros of foreign assets. At the same time, assume that foreigners purchase 1.5 trillion euros of French assets. What is France's net capital outflow? Given this information, does France exhibit a trade surplus or a trade deficit? Suppose, instead, that France had exports of 50 billion euros, imports of 70 billion euros, and that domestic investment was 100 billion euros. What are total savings in France? 2. J&W Marriott - Miraflores If the exchange rate is 3 units of Peruvian soles per US dollar and a hotel room in J&W Marriott - Miraflores, in Lima, costs 300 soles, then how many US dollars would you need to get a room? How will your purchase affect Peru's net exports (i.e., will Peru's net exports increase or decrease)? 3. PPPing Suppose that the nominal exchange rate is 80 yen per dollar, the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Japan is 50,000 yen. Suppose that these values change to 100 yen per dollar, $600, and 70,000 yen. According to the PPP theory, would you expect the real exchange rate to appreciate or depreciate? Would you expect U.S. net exports to increase or decrease?