2. Intervention with Euros Assume that Belgium, one of the European countries that uses the euro as its currency, would prefer that its currency depreciate against the U.S. dollar. Can it apply central bank intervention to achieve this objective? Explain.

A foreign exchange intervention with an offsetting open market operation (e.g. a purchase of US Treasury bonds by the Fed with the Fed's international reserves) by the central bank that leaves the monetary base unchanged is called O. a) an exchange rate neutral intervention.O. b) an unsterilized foreign exchange intervention.O. c) a tax base neutral foreign exchange intervention.O. d) a sterilized foreign exchange intervention.

Assume the United Kingdom (home) and the United States (foreign) have a fixed exchange rate regime. (i) A supply shock in the Foreign Exchange Market leads to an appreciation of the $/£ exchange rate. Explain how the Bank of England will intervene to defend the fixed exchange rate. Use graphs to support your answer. Label all axes. (ii) Discuss the effects on the domestic economy of this intervention. Which additional measures could the Bank of England take to offset these effects

Q. If barriers to international securities markets are reduced, will a country’s interest rate be more or less susceptible to foreign lending and borrowing activities? Explain.

Should the Federal Reserve take the decision to introduce its own digital currency into circulation, which of the following policy instruments will it make use of?  a) Open Market Policy b) Credit ceilings c) Exchange control regulations d) Deposit rate control

1.One proposal to stabilize the international monetary system involves setting exchange rates at  their purchasing power parity rates. Once exchange rates are correctly aligned (according to PPP), each nation would adjust its monetary policy so as to maintain them. What problems might arise from using the PPP rate as a guide to the equilibrium exchange rate?

Which of the following statement is incorrect? O Currency crisis is more likely happen under the fixed exchange rate system. O Capital flight is more likely occur under the fixed exchange rate system. Fixed exchange rate regime relied on the ability of central banks to intervene in the currency market. O China is taking free floating exchange rate system.

Should Ghana continue to peg the Cedi against the colonial currency basket or peg to the Chinese Yuan. Provide sufficient reasons to your position.

Which of the following is a major benefit of international lending? O It eliminates exchange rate risk in financial activities. It requires reducing restrictive international trade practices in the lending and the borrowing countries. It allows both small countries and large countries to apply similar levels of optimal taxes on the international loans. O It allows some lenders to shift their lending to foreign borrowers who are willing to pay higher interest rates on the loans.

If a country’s par exchange rate is overvalued, what kind of intervention would that country’s central bank be forced to undertake, and what kind of effect would it have on its international reserves? What must happen if this country’s central bank decides not to intervene anymore?