Economics

Suppose the spot exchange rate is $2.00 per euro and that the annual interest rate on one-year government bond is 10 percent in the U.S. and 8 percent in Germany. a. If you expect the spot price of the euro to be $2.00 in one year, where will you invest? Explain b. In order for investors to be indifferent between the U.S. and German securities, what would the one-year forward rate for euros have to be? c. Given the initial spot rate at $2.00 per euro, interest rates as given above, and the principle of arbitrage, would the euro be expected to appreciate or depreciate? Explain.

International Economics

Consider the economy of United States and Mexico. There are two goods, computer chips and tequila, and two factors of production, skilled and unskilled workers. Computer chips are relatively intensive in skilled labor, and there are no technological differences between both countries. Initially there is no trade. See attached file for full problem description.

Debits and Credits to the Balance of Payments Account

Debits and Credits to the Balance of Payments Account. See attached file for full problem description.

International Economics

Depositing investments in different countries. See attached file for full problem description.

International Economics

See attached file for full problem description.