1. 1. Chapter 1
1. Define and explain the theory of comparative advantage.
2. How do the motivations of individuals, both inside and outside the
organization or business, define the limits of financial globalization?
2. 2. Chapter 2
1. If a country follows a fixed exchange rate regime, what macroeconomic
variables could cause the fixed exchange rate to be devalued?
2. What are the advantages and disadvantages of fixed exchange rates?
3. What are the attributes of the ideal currency?
4. Why did the fixed exchange rate regime of 1945-1973 eventually fail?
3. 3. Chapter 4
1. Why doe the Balance of Payments (BOP) always “balance”?
2. What are the main summary statements of the balance of payments
accounts, and what do they measure?
3. If the bank you own has no excess reserves and a sound customer comes in
asking for a loan, should you automatically turn the customer down,
explaining that you dont have any excess reserves to lend out? Why or why
not? What options are available for you to provide the funds your customer
needs?
4. The Fed buys $100 million of bonds from the public and also lowers the
required reserve ratio. What will happen to the money supply?
5. Describe how each of the following can affect the money supply: (i) the
central bank; (ii) banks, and (iii) depositors.
