Read the following materials to answers the questions below.

• Chapter Topic – Long Run Economic Growth
• Chapter Topic – Open Economy Macroeconomics
• Chapter Topic – Macroeconomics: The Big Picture
• Chapter Topic – International Trade
• Chapter Topic – Fiscal Policy
• Chapter Topic – Monetary Policy

Answer the questions below in as much detail as possible. All answers must be typed neatly (See the directions above).

1. The value of the US dollar is currently at very high levels in historical contexts vis-à-vis other currencies. When the value of dollar increases, how is it supposed to affect the US exports and imports? What effect could we have on international trade balances, domestic employment and GDP? Carefully articulate your answer. Provide graphs in support of your argument wherever possible. (Limit: 2 pages; Ideally, between 1 – 1.5 pages)

2. What effect does an expansionary fiscal policy have on prices and how can the changes in the price levels affect the value of the domestic currency? Relate the changes in the value of the domestic currency (due to the effects of expansionary fiscal policy) to international trade balances, domestic employment, domestic inflation and GDP of the country. Carefully articulate your answer. Provide graphs in support of your argument wherever possible. (Limit: 2 pages; Ideally, between 1 – 1.5 pages)

3. Describe the factors that are crucial to achieve long run economic growth. What special roles are played by investments in human capital and research and development in ensuring long run economic growth? While goods, services and capital are fairly internationally mobile, labor is not. What impact does this asymmetry expected to have on the long run economic growth? (Limit: 2 pages; Ideally, between 1 – 1.5 pages)