G12 - Week 5 - Day 2

In-class

1. Ch. 22 quiz
2. News presentation?
3. Questions from the videos?
1. Balance of Payments - the Relationship between the Accounts
2. The relationship between the Current Account Balance and Exchange Rates
4. In-class work
1. Outline the components of the current, financial, and capital accounts
2. Explain how the current account is balanced with the financial/capital accounts
3. Why does a current account deficit result in downward pressure on the exchange rate of a currency?
4. Why does a current account surplus may result in upward pressure on the exchange rate of a currency?
5. Exercises 2-4

At-home

1. The Marshall-Lerner Condition

2. J-Curve and the Marshall-Lerner Condition