With reference to appropriate theory AND empirical evidence, write a 1,750-word Essay on ONE

Faculty of Business and Law
Assignment Brief Mode C and Q Regulations 

Assessment Information

This assignment is an individual assignment.
With reference to appropriate theory AND empirical evidence, write a 1,750-word Essay on ONE of the following topics:
1       Critically assess the strengths and weaknesses of Purchasing Power Parity as a theory of exchange- rate determination.
2       In September 2022, the Bank of England’s Monetary Policy Committee raised the interest rate to
2.25% with the aim of reducing inflation, the highest level since 2008. Critically evaluate its implication for output and the foreign exchange (FX) market, and how UK’s exchange-rate regime influences the effectiveness of this policy.
3       With reference to appropriate theory and empirical evidence, critically discuss the importance of fiscal dominance in explaining why exchange-rate crises occur. 
4       Critically evaluate the economic costs and benefits of euro area membership in the context of Optimum Currency Area theory and Maastricht convergence criteria. 

Criteria for Assessment

        Essay structure (effective introduction and conclusion, use of paragraphs, logical organization).
        Use of economic theory and empirical evidence (clear and accurate analysis, appropriate use of data, accurate interpretation of empirical evidence, good explanation of diagrams and underlying theories, demonstrates clear understanding of key issues).
        Critical evaluation (thoughtful evaluation of arguments and evidence, explains key assumptions and limitations, demonstrates wider knowledge and understanding of relevant literature).
        Presentation and referencing (clear and professional presentation, correct spelling and grammar, follows CU APA referencing guide).
This assignment is designed to assess learning outcomes:
Analyse the determination of exchange rates in both the short and long run using appropriate theory and empirical evidence.
Examine in detail the macroeconomic implications of alternative exchange-rate regimes and international capital mobility.

Word Count

The word count is 1750
There will be a penalty of a deduction of 10% of the mark (after internal moderation) for work exceeding the word limit by 10% or more.
The word limit includes quotations and citations, but excludes the references list.

Theory and Empirical Evidence: Purchasing Power Parity
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