1) Japan has a higher ratio of stock market capitalization relative to GDP than the US. What would explain this?

2) The Gold Standard and the Money Supply. Under the gold standard all national governments promised to follow the “rules of the game.” This meant defending a fixed exchange rate. What did this promise imply about a country’s money supply?

3) Mavericks. The United Kingdom, Denmark, and Sweden have chosen not to adopt the euro, but rather to maintain their individual currencies. What are the motivations of these three countries, which are also members of the European Union?

4) Bretton Woods Failure. Why did the fixed exchange rate regime of 1945–1973 eventually fail?

5) What lessons can economists draw from the breakdown of the Bretton Woods system?

6) Why are the sovereign debtors of the euro zone considered to have a problem that is different from these of any other heavily indebted country, like the United States?

7) In early 1989, Japanese interest rates were about 4 percentage points below U.S. rates. The wide difference between Japanese and U.S. interest rates prompted some U.S. real estate developers to borrow in yen to finance their projects. Comment on this strategy, and spell out the sequence of the transactions.

8) The Fed adopts an easier monetary policy. How is this likely to affect the value of the dollar?