Assignment 2 – Exchange rates

Assignment 2 – Exchange rates (ECO1102)

Assignment:
At the end of 2014, the Russian ruble has experienced a sharp depreciation. On the second page
of the assignment, Table 1 shows the time series of nominal exchange rate between the U.S.
dollar and the Russian ruble for this particular period.

Question: Suppose that you are working for the Central Bank of Russia. Propose TWO
methods that, theoretically, would help to stop the crisis and help the Russian ruble to
appreciate again in the short term.

Select the arguments that you find most relevant and work them out convincingly. Your
argument should be understandable for persons with an academic thinking level, who are
interested in macroeconomics but not necessarily familiar with the specifics of the “The
macroeconomics of open economies” models.

Required readings:
– Mankiw, Kneebone and McKenzie, Principles of Macroeconomics, 6
th Canadian Edition,
Chapter 12 and Chapter 13 (pp.303-313);

References:
– Use your own words.
– Do not forget to cite your sources! No need to include the reference to the book but refer
to a page number if you paraphrase. If you use other readings they should be mentioned
as reference. (Reference list is excluded from the two pages maximum).

Evaluation criteria (100% score if all criteria fulfilled):
– Maximum length: 2 page, Times New Roman (12pt), space 1.0, standard margins.
– Minimum length: one page.
– The text should be structured as an essay and use the terminology discussed in class.
– Mention your name and student ID on top of the assignment.
– Submit as Word attachment on the course website under “Assignments” before Tuesday
23 June, 10 pm (after that there is a 24 hour grace period on which you may rely AT
YOUR OWN RISK). Submissions by e-mail (or Blackboard vista e-mail) will not be
accepted under any circumstances.

Learning objectives:
– Understand how a supply-demand model works at macroeconomic level;
– Practice interpreting and explaining these models to others;
– More general: constructing an evidence-based argument.

Fugure 1: The value of US dollar relative to the value of Russain ruble (2014)
Source: The Central Bank of the Russian Federation
http://www.cbr.ru/eng/