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Pick 4 of the following 6 questions.
- Explain how exchange rates are considered a self-correcting mechanism of international trade.
- Explain with examples (at least 3) of arbitrage in exchange rates.
- Explain how a countryâ€™s balances of payment directly affect the exchange rate.
- Explain the many reasons why companies locate outside of their home country.
- Explain how the balance of payments is balanced. What pays for a current account defeicit or a capital account surplus.
- Explain the relationship between interest rates and exchange rates.