short answer国际经济学.docx

1、short answer国际经济学SHORT ANSWER1. What are the components of the current account of the balance of payments?ANS: The current account includes transactions in goods and services, income flows, and unilateral transfers.2. Concerning the balance of international indebtedness, when is a country a net cred

2、itor or a net debtor?ANS: A country is a net creditor when its claims on foreign nations exceed foreign claims on it. The nation is a net debtor when foreign nations claims on it exceed its claims on foreign nations.ESSAY1. How do we measure the international investment position of the United States

3、 at any point in time? How did the U.S. become a net debtor nation so rapidly?ANS: The international investment position of the United States is measured by the monetary value of U.S. assets abroad versus foreign assets in the United States. Unlike the balance of payments, which is a flow concept, t

4、he balance of international indebtedness is a stock concept. The reason for the U.S. becoming a net debtor nation is that foreign investors have placed more funds in the United States than the U.S. residents have invested abroad. The United States has been considered attractive to foreign investors.

5、2. What does a current account deficit mean?ANS: When a country realizes a deficit in its current account, it has an excess of imports over exports of goods, services, income, and unilateral transfers. This leads to an increase in net foreign claims upon the home country. The home country becomes a

6、net demander of funds from abroad, the demand being met through borrowing from other countries or liquidating foreign assets. The result is a worsening of the home countrys net foreign investment position.SHORT ANSWER1. What foreign exchange transactions do banks typically engage in?ANS: Banks typic

7、ally engage in spot, forward, and swap transactions.2. How is the equilibrium rate of exchange determined?ANS: The equilibrium rate of exchange in a free market is determined by the intersection（交集） of the supply and demand schedules of foreign exchange.ESSAY1. Is it possible to trade foreign exchan

8、ge in the futures market? How does such trading differ from the forward market?ANS: Yes. In the futures market, contracting parties agree to future exchanges of currencies and set applicable exchange rates in advance. The futures market is distinguished from the forward market in that only a limited

9、 number of leading currencies are traded; moreover, trading takes place in a standardized contract amount and in a specific geographic location.2. Where are foreign currency options traded?ANS: Foreign-currency options are traded in a variety of currencies in Europe and the United States. The bank m

10、arket for foreign-currency options consists of large U.S. banks that write options for their corporate customers. In addition, the Amsterdam, Montreal, and Philadelphia exchanges provide centralized trading floors devoted to foreign-currency-option trading.SHORT ANSWER1. What is the purchasing power

11、 parity approach to exchange rate determination?ANS: The purchasing power parity approach asserts that changes in relative national price levels determine changes in exchange rates over the long run. A currency maintains its purchasing power parity if it depreciates (appreciates) by an amount equal

12、to the excess of domestic (foreign) inflation over foreign (domestic) inflation.2. What is exchange rate overshooting?ANS: An exchange rate is said to overshoot when its short-run response to a change in market fundamentals is greater than its long-run response.ESSAY1. In a free market, what determi

13、nes exchange rates in the long run and the short run?ANS: The long-run determinants of exchange rates include market fundamentals such as consumer preferences for domestic and foreign goods, government trade policies, productivity levels, and relative price levels. In the short run, exchange rates a

14、re determined by interest rate differentials and market expectations concerning economic growth, inflation rates, and interest rates.2. What is the asset market approach to exchange rate determination?ANS: Over short periods of time, decisions to hold domestic or foreign financial assets play a much

15、 greater role in exchange rate determination than the demand for imports and exports does. According to the asset market approach, investors consider two key factors when deciding between domestic and foreign investments: relative interest rates and expected changes in exchange rates. Changes in the

16、se factors, in turn, account for fluctuations in exchange rates that we observe in the short run.SHORT ANSWER1. Compared to classical economists, how did Keynesian economics change the discussion of trade adjustment?ANS: Keynesian economics put a greater emphasis on the income effects of trade in ex

17、plaining trade adjustment. The classical economists emphasized price and interest rate adjustments.2. What is the foreign repercussion effect?ANS: It refers to a situation in which a change in one nations macroeconomic variables relative to another nation will induce a chain reaction in both nations

18、 economies. The consequence is that a rise in income of a nation with a balance-of-payments surplus and the fall in income of the nation with a balance-of-payments deficit are dampened.ESSAY1. Explain David Humes theory of automatic adjustment for balance of payments disequilibria.ANS: David Humes t

19、heory provided an explanation of the automatic adjustment process that occurred under the gold standard. Starting from a condition of payments balance, any surplus or deficit would automatically be eliminated by changes in domestic price levels. Nations with a payments surplus would experience infla

20、tion; this would lead to a loss of competitiveness, a decrease in net exports, and a fall in the surplus. The opposite applies to nations with a payments deficit.2. Is the monetary approach to the balance-of-payments part of the traditional adjustment theories?ANS: The monetary approach to the balan

21、ce of payments is presented as an alternative, rather than a supplement to traditional adjustment theories. It maintains that, over the long run, payments disequilibria are rooted in the relationship between the demand for and the supply of money. Adjustment in the balance of payments is viewed as a

22、n automatic process.SHORT ANSWER1. How do demand elasticities influence a countrys trade position when exchange rates change?ANS: According to the elasticities approach, currency depreciation leads to the greatest improvement in a countrys trade position when demand elasticities are high. This is be

23、cause the response of trade volumes to exchange-rate changes is highest when demand is elastic.2. How is the absorption approach used for analyzing the effects of currency devaluation?ANS: The absorption approach provides insights about the changes in the trade balance by considering the impact of d

24、evaluation on the spending behavior of the domestic economy and the influence of domestic spending on the trade balance.ESSAY1. What is a pass-through relationship?ANS: The extent to which exchange-rate changes lead to changes in import prices and export prices is known as the pass-through relations

25、hip. Complete (partial) pass-through occurs when a change in the exchange rate brings about a proportionate (less than proportionate) change in export prices and import prices. Empirical evidence suggests that pass-through tends to be partial rather than complete.2. How do movements in exchange rate

26、s affect domestic costs, in the presence of foreign sourcing?ANS: Manufacturers often obtain inputs from abroad whose costs are denominated in terms of a foreign currency. As foreign-currency-denominated costs become a larger portion of a producers total costs, an appreciation of the domestic curren

27、cy leads to a smaller increase in the foreign-currency cost of the firms output and a larger decrease in the domestic cost of the firms output, compared to the cost changes that occur when all input costs are denominated in the domestic currency. The opposite applies for currency depreciation.SHORT

28、ANSWER1. Which nations use multiple exchange rates the most and why?ANS: Multiple exchange rates are used primarily by the developing nations who wish to ensure that necessary goods are imported and less essential goods are discouraged.2. What is an SDR?ANS: The SDR is a currency basket composed of

29、five currencies established by the International Monetary Fund. Nations desiring exchange-rate stability are attracted to the SDR as a currency basket against which to anchor their currency values.ESSAY1. What is the difference between the crawling peg and adjustable pegged exchange rates?ANS: Under

30、 the adjustable peg, currencies are tied to a par value that changes infrequently but suddenly, usually in large jumps. The crawling peg allows a nation to make small changes in par values, perhaps several times a year, so that they creep along slowly in response to evolving market conditions.2. How

31、 can currency boards and dollarization prevent currency crises?ANS: A currency board is a monetary authority that issues notes and coins convertible into a foreign currency at a fixed exchange rate. The most vital contribution a currency board can make to exchange-rate stability is to impose discipl

32、ine on the process of money creation. This results in greater stability on domestic prices which, in turn, stabilizes the value of the domestic currency. Dollarization occurs when residents of a county use the U.S. dollar alongside or instead of their own currency. Dollarization is seen as a way to protect a countrys growth and prosperity from bouts of inflation, currency depreciation, and speculative attacks against the local currency.PTS: 1SHORT ANSWER1. What policy instrument should be used when demand-