Klausur und Testaufgaben im Fach International Economics

1) Define the balance of payments. What are the reasons for studying it closely? What policy insights does the trade balance offer? (8 points)
2) Explain how foreign direct investment features in both the financial account and the current account (over time) of the balance of payments. (6 points)
3) Outline purchasing-power parity theory in the context of the determination of long-run exchange rates. How well does the theory stand up to empirical evidence? (6 points)
4) What are the principal problems associated with the System of managed flexibility for exchange rates? (8 points)
5) Explain how a currency board differs from a central bank. Are there any circumstances where you would recommend that a transition economy replace its central bank by a currency board? (5 points)
6) Why did official development flows decline in the 1990s? Why did international private capital flows rapidly increase during this time? (7 points)

In all, you may receive 40 points. In order to pass the exam (mark: sufficient (4.0)) you must obtain 15 points at least.
You may answer the questions in German if you would like to do so.