need q2 done in 1.5 hours only

Question 2

Consider the following information about a country’s international transactions during the year 2020:



Merchandise exports


Merchandise imports


Income received from foreigners


Income paid to foreigners


Unilateral transfers


Foreign direct investment, outward


Foreign direct investment, inward


Foreign portfolio investment, outward


  • Compute the value of the country’s financial account. Assuming that the official reserves account of the country has a value of –200 (minus(!) 200), determine the value of the country’s current account and its unilateral transfers. Does the value for unilateral transfers that you obtained imply transfers to abroad or transfers from abroad? (6 points)
  • You learned in the course that in the long run exchange rates should be consistent with purchasing power parity (PPP). Does the empirical evidence support this theoretical prediction? To answer this question, describe the two ‘variants’ of PPP theory, absolute and relative PPP. Then explain how one could test empirically whether a certain exchange rate is consistent with PPP. What are the research findings regarding the empirical validity of absolute and relative PPP? (9 points)
  • Consider the following three currencies: Euros (eur), Swiss Francs (CHF) and U.S. Dollar ($). Suppose that the bilateral exchange rates between the three currencies are currently as follows: 1.1 CHF/eur, 0.9 CHF/$, 1.3 $/eur. First, discuss how the presence of triangular arbitrage can be determined given this information. Then, explain how one could make a profit from triangular arbitrage in this concrete case and how the presence of such profits will affect the $/eur exchange rate. (10 points)

Type your answer in the space between the two lines (word limit: 120).



Type your answer in the space between the two lines (word limit: 300).



Type your answer in the space between the two lines (word limit: 200).

Research Paper 101
Calculate your paper price
Pages (550 words)
Approximate price: -

Reasons to trust Research Paper 101

On Time Delivery

We pride ourselves in meeting the deadlines of our customers. We take your order, assign a writer but allow some more time for ourselves to edit the paper before delivering to you. You are guaranteed a flawless paper on a timely manner...

24x7 Customer Live Support

Our team at Research Paper 101 is committed to handling your paper according to the specfications and are available 24*7 for communication. Whenever you need a quick help, you can talk to our writers via the system messaging or contact support via live chat and we will deliver your message instantly.

Experienced Subject Experts

Online Experts from Research Paper 101 are qualified both academically and in their experiences. Many are Masters and Phd holders and therefore, are qualified to handle complex assignments that require critical thinking and analyses...

Customer Satisfaction

We offer dissertation papers as per students’ wishes. We also help craft out the best topics and design concept papers. By ordering with us, you are guaranteed of defending and making through those hard faced professors in the defense panel!

100% Plagiarism Free

We at Research Paper 101 take plagiarism as a serious offence. From the start, we train our writers to write all their papers from scratch. We also check if the papers have been cited appropriately. Our website also has a tool designed to check for plagiarism that has been made erroniusly. In essense, the paper you get will be 100% legit...

Affordable Prices

We understand that being a student is very challenging, some students balance between work and studies in order to survive. We therefore offer pocket friendly rates that are very competitive in the market.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.

Need help? Chat with Us