Long Questions:
1. Asymmetric information (moral hazard) how asymmetric information disrupts economic function?
2. Using model of SR exchange rate, show changes in exchange rate. (Including graph to illustrate)
a. Explain and derive Short Run and Long Run)
b. Any factor that would causes exchange rate to change (show how it moves)
c. Does model help to explain exchange rate volatility? How?

3. Explain “Lemon stuff and relation to Asymmetric information”.
4. Explain expected Return (Ex. Canadian dollar, Euro dollar, US dollar) including graph to illustrate.
a. Increase or decrease
b. Future exchange rate (what caused?)
c. How things move

Short Questions:
1. Price of Japanese steel rise by 10% and Canadian steel stays the same, use Purchase power parity theory to explain
a. Depreciation and appreciation of currency