Question
Short Answer 4-5 sentences for each answer
1. Why is expansionary fiscal policy a moral hazard (ie temptation) under a fixed exchange rate system?
2. What are the main advantages and disadvantages of having a Euro-style monetary union?
3. What are some of the dangers of a strong but short oil boom?
4. What are the dangers of very tight monetary policy in a flexible system?
5. is simply borrowing where interest rates are cheap and investing where interest rates are high, without purchasing any forward cover. If forward markets are efficient, should the returns from carry trade be different from excess returns under covered interest parity? Why or why not?
