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Finish Chapter 6: Prob. # 1,2,9 (‘Questions and Applications’ – at end of each chapter)

1. Exchange Rate Systems Compare and contrast the fixed, freely floating, and managed float exchange rate systems. What are some advantages and disad- vantages of a freely floating exchange rate system ver- sus a fixed exchange rate system?
2. Intervention with Euros Assume that Belgium, one of the European countries that uses the euro as its currency, would prefer that its currency depreciate against the U.S. dollar. Can it apply central bank intervention to achieve this objective? Explain.

9. Effects on Currencies Tied to the Dollar The Hong Kong dollar’s value is tied to the U.S. dollar. Explain how the following trade patterns would be affected by the appreciation of the Japanese yen against the dollar: (a) Hong Kong exports to Japan and (b) Hong Kong exports to the United States.