Reference no: EM132491939

Use 200 - 250 words for each question. Ensure to answer the whole question not partly.

Question 1. Covered interest differentials and covered interest parity. What motivates covered (as opposed to uncovered) borrowing and investing strategy in international finance? Show how market forces tend to cause the covered interest differential to converge to zero, and what can prevent absolute convergence to zero?

Question 2. How has Coronavirus affected emerging market economies. In terms of their output, attractiveness for foreign investment, and exchange rates against the US dollar? What is the strongest economic argument for making loans and aid available to these countries during the crisis?

Question 3. What are the advantages for an emerging market to be a foreign direct investment host country? In your answer, address the incentives for good economic governance, advantages over other forms of capital flows, trade, domestic savings and investment, and economic growth. Describe any potential negative effects of FDI.

Question 4. Based on the article by Stefan Zweig on the German hyperinflation, describe how this event affected prices, the nature of economic exchange, income distribution, and lifestyle at the time. What role did foreign exchange play in the German hyperinflation? What economic policy was required to end the crisis?