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Q. Suppose Mexico and the United States were the only two countries in the world. There exists anexcess supply of pesos on the foreign exchange market. This suggests that:

Q. If a nations terms of trade is ½ its trade partners terms of trade is

Q. The balance of payments equals:

Q. What would encourage trade between two countries?

Q. If interest rate parity holds, then the one-year forward rate of a currency will ______ the predicted spot rate of the currency in one year according to the international Fisher effect.

Q. Devaluation works best when

Q. The terms of trade of developing countries have a secular tendency to

Q. By adjusting the model of comparative advantage to include transportation costs along with production costs, we would expect

Q. If the exchange rate is below the equilibrium level then in a floating exchange rate system:

Q. Under imperfect asset substitutability: