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Week 1 Introduction and overview - Coggle Diagram
Week 1 Introduction and
overview
Foreign Exchange: Currencies and Crises
How are exchange rates determined?
Why do some exchange rates fluctuate sharply in the short run, while others are
almost constant?
Why do exchange rates rise, fall, or stay flat in the long run?
How do exchange rates affect the real economy?
How do they affect international prices, the demand for goods from different countries, and levels
of national output?
How do they affect the values of foreign assets, and hence change national wealth?
When Exchange Rates Misbehave (Exchange rate crisis)
HEADLINES: Economic Crisis in Iceland
Why do exchange rate crises occur?
Are they an inevitable consequence of deeper fundamental problems in an economy, or
are they an avoidable result of “animal spirits” irrational forces in financial markets?
Why are these crises so economically and politically costly?
What steps might be taken to prevent crises, and at what cost?
Globalization of Finance: Debts and Deficits
Key Topics in The Balance of Payments
How do different international economic transactions contribute to current
account imbalances?
How are these imbalances financed? How long can they persist?
Why are some countries in surplus and others in deficit?
What role do current account imbalances perform in a well functioning
economy?
Why are these imbalances the focus of so much policy debate?