hey there I have an international economics paper that is due 48 hours from now
there are two parts. part (a) has 2 question and part (b) has 3 questions.
basically you have to answer three questions only at least one from each part.
the answers must be perfectly completed and explained very well
here are the questions:
1. In a two-country global economy with “perfect” capital mobility (pcm), explain: a) the effects of
a fiscal expansion in a “small” country when the exchange rate is free to “float”, as opposed to
(b) where the small country is committed to maintaining a “pegged” exchange rate. What would
be the effect in the latter case if it were a monetary expansion in the small country?
2. In a two-country global economy with “perfect” capital mobility (pcm), explain: a) the effects on
a “small” country when a “large” country undertakes a fiscal expansion if the exchange rate is
“pegged”, as opposed to (b) a situation where the “large” country undertakes a monetary
expansion under a “floating” rate regime. Discuss the relevance of these scenarios to Canada in
3. Discuss and explain the rationale underlying, and the institutional structure – in particular the
functioning of the IMF – resulting from, the Bretton Woods agreement. Explain and evaluate
how this institution evolved after the collapse of Bretton Woods.
4. Discuss and explain the trials and tribulations of the US dollar in the foreign exchange markets,
beginning with a dollar shortage, a dollar “glut”, and ultimately the causes and results of the
break-up of the Bretton Woods arrangement.
5. Given the existence of a floating-rate system, discuss the effects of the Reagan tax cuts –
together with spending increases – on developing countries’ debt positions, particularly those
Latin American countries that relied heavily on recycled OPEC surpluses. How was a major
default avoided, and how did attempts to reverse the US BoP deficits result in Japan’s “lost