Answer 6 questions. If financial calculations are required, please write down the steps. This paper for exam shot answer questions, so the answer should accurate, does not require reference. Q1. — Deficits in the Current account of the BOP are discussed far more than movements in the Capital account. It is said that the Current account causes the capital account. Is it possible the Capital account causes the current account instead? Is the current account relevant in assessing macroeconomic-macrofinancial issues in the U.S. economy? Q2. — What is offshore banking about? How did offshore banking start? How did the international crisis [OPEC] develop in the 1970’s and early 1980’s, and what was the result? Q3. — Do you think a return to the Gold Standard is a solution to the current imbalances in world balances of payments for surplus and deficit nations? Is the trade balance sensitive to exchange rates? Q4. — Summarize the steps you would take to hedge against interest rate risk. What is the outcome of a hedge? Comment on the statement: “When you hedge you neither make nor lose money” Q5. — What is the International Fisher Effect? Is the basic PPP relationship [e = Pi — Pj] relevant in explaining the International Fisher effect? What is the rationale for claiming IRP can forecast exchange rates? Q6. — Discuss the determinants of foreign exchange rates. Include a detailed discussion of the Monetary PPP model: e* = Pi — Pj = [M, p, r], and its addition of (a, w) to determine the spot rate [e].