Questions from Financial Markets

Q: Why is it that in a pure flexible exchange rate system,

Why is it that in a pure flexible exchange rate system, the foreign exchange market has no direct effects on the monetary base and the money supply? Does this mean that the foreign exchange market has...

Q: “The abandonment of fixed exchange rates after 1973 has meant that

“The abandonment of fixed exchange rates after 1973 has meant that countries have pursued more independent monetary policies.” Is this statement true, false, or uncertain? Explain your answer.

Q: Are controls on capital outflows a good idea? Why or why

Are controls on capital outflows a good idea? Why or why not?

Q: Discuss the pros and cons of controls on capital inflows.

Discuss the pros and cons of controls on capital inflows.

Q: Why might central banks in emerging-market countries find that engaging

Why might central banks in emerging-market countries find that engaging in a lender-of-last-resort operation might be counterproductive? Does this provide a rationale for having an international lende...

Q: Has the IMF done a good job in performing the role of

Has the IMF done a good job in performing the role of the international lender of last resort?

Q: What is the price of a perpetuity that has a coupon of

What is the price of a perpetuity that has a coupon of $50 per year and a yield to maturity of 2.5%? If the yield to maturity doubles, what will happen to its price?

Q: What steps should an international lender of last resort take to limit

What steps should an international lender of last resort take to limit moral hazard?

Q: If the Federal Reserve buys dollars in the foreign exchange market but

If the Federal Reserve buys dollars in the foreign exchange market but conducts an offsetting open market operation to sterilize the intervention, what will be the effect on international reserves, th...

Q: If the Federal Reserve buys dollars in the foreign exchange market but

If the Federal Reserve buys dollars in the foreign exchange market but does not sterilize the intervention, what will be the effect on international reserves, the money supply, and the exchange rate?...