In Krugman’s speculative attack model: a. What is the shadow exchange rate? Why does it increase over time? b. Why does the speculative attack occur at exactly the time the shadow exchange rate equals the fixed exchange rate? c. Why is there no jump in the exchange rate when the speculative attack occurs? d. How can the model be modified so a jump does take place when the speculative attack occurs?

The following paragraphs discuss the impact of various economic events on the exchange rate.  Complete the paragraphs by filling in the blanks.  Use any of the words from the following list (you can use each of these words as many times as you wish): demandsupplyleftrightbuysellimportsexportsrisefallincreasesdecreases What happens to the exchange rate when the current account balance falls?A falling current account balance means that the value of ____(1) are rising relative to _____(2).  Let's assume that one does rise and one does fall to cause the current account balance to fall. _____(3) affects the ____(4) for/of $NZ so a decline in this means ____(5) for/of $NZ shifts left.  _____(6) affects the _____(7) for/of $NZ so a rise in this means _____ (8)for/of $NZ to shift right.  The combined effect from the fall in the current account balance is that we expect the value of the $NZ to ____(9).  What happens to the exchange rate when New Zealand interest rates fall relative to the rest…

“If a country wants to keep its exchange rate fromchanging, it must give up some control over its monetary policy.” Is this statement true, false, or uncertain?Explain your answer

The Policy Trilemma states that a country or a monetary union cannot pursue the following three policies at the same time a) free capital mobility, a flexible exchange rate, and an independent monetary policy. b) capital controls, a flexible exchange rate, and an independent monetary policy. c) capital controls, a fixed exchange rate, and an independent monetary policy. d) free capital mobility, a fixed exchange rate, and an independent monetary policy.