Question;Question 1: Short-answered essay questionsa. What are some of the reasons for the positive investment income U.S. earns on its external wealth, even though she has more foreign liabilities than foreign assets?b. What is currency mismatch? How does currency denomination (composition) of the foreign assets and liabilities affect the external wealth of an economy in case of a large depreciation? Why certain group of countries constantly experience currency mismatch?Question 2:What is exchange rate passthrough? What are the possible causes of limited exchange rate passthrough? What are the implications of it for effectiveness of stabilization policy?
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