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1. What is a current account transaction? Give an example.
2. What is a capital account transaction? Give an example.
3. Suppose you had to explain to a person on the street (who is not an economist) why a current account deficit must be accompanied by a capital account surplus. What would you say?
4. Suppose that the exchange rate between U.S. dollars and Swedish krona is $1 = 6.6565 krona. How many dollars can 10,000 krona be exchanged for?
5. You will be vacationing in Belgium and wish to take with you $500 in Belgian francs. If the exchange rate is $1 = 29.14 Belgian francs, how many francs will you need?
6. Explain covered interest parity.
|David A. Latzko
Department of Business and Economics
Wilkes-Barre, PA 18766
phone: (717) 408-4718
fax: (717) 408-4917