1.Why does standard economic theory promote financial liberalization that enables capital mobility? (Mention two reasons)

2. Does empirical reality confirm the predictions of the standard view as mentioned in #1? Mention two empirical features of recent patterns of capital flows to support your answer

3. Why is instability (dues to herding and volatility) inherent to the functioning of financial markets? (Two reasons)

4. Why did developing countries start stockpiling foreign reserves after 2000?

5. What is the ‘Original Sin" in international finance?

6. Would you advocate capital controls? Give two reasons for your answer.

7. Explain briefly why theory considered the Gold Standard to be automatically self adjusting?

8. Explain briefly what is meant by credible commitment to the "rules of the game" under the gold standard.

9. What was the role of the colonies and countries in the periphery in maintaining stability under the gold standard?

10. What were three main features of the Bretton Woods system? Mention one important way in which the actual Bretton Woods system failed to match the plan of John Maynard Keynes

11. Why does the international monetary system need a lender of last resort? Which country played the role of the International lender of last resort under the International Gold standard and under the Bretton Woods system, respectively.

12. Mention two common features of the currency crises of the 80's and the 90's.