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    Finance: Demand, Tariffs, Exchange Rate, Money Supply

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    5. If the demand for a country's exports falls at the same time that tariffs on imports are raised, will the country's currency tend to appreciate or depreciate in the long run?

    10. Mexican peso trading at 10 pesos per dollar. If expected U.S. inflation rate is 2% while expected Mexican inflation rate is 23% over next year, what is the expected exchange rate in one year?

    1. If Federal Reserve buys dollars in foreign exchange market but conducts offsetting open market operation to sterilize the intervention, what will be the impact on international reserves, the money supply, and the exchange rate?

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

    18. 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 lender of last resort like the IMF?

    1. What is the purpose of the U.S. balance-of-payments system?

    2. Do you feel the IMF is an effective organization? Why? Why not?

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    Solution Summary

    This solution of 416 words discusses various scenarios that touches on concepts such as demand, tariffs, exchange rate, money supply, IMF, and balance of payments.

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