I. Exchange Rate Regime: Write a summary of Croatia’s exchange rate regime based on information from the IMF Annual Report on Exchange Rate Arrangements 2018, using the exchange rate regime designation given in the country details on page 55 onwards, and Table 2 elaboration of the country’s monetary policy arrangement on page 6 onwards. Use your own words and clearly explain the concepts. (Approximately 200-250 words).

II. Exchange Rate Performance: Write an overview of the nominal exchange rate over the period 2000 to 2019. Explain how it reflects the type of exchange rate regime of Croatia. Note any unusual movements and summarize the overall trend. Then explain the significance of the real effective exchange rate and summarize its performance over this period. Again, note any unusual movements and summarize the overall trend. Speculate about why the real exchange rate fluctuates and how this is likely to impact the trade balance. (Approximately 200-250 words.)

III. Policy Trilemma: On the basis of your research on the exchange rate regime, exchange rate performance and the capital openness graph, described separately, position the name of Croatia in the relevant region of the Trilemma triangle. Explain why you have positioned your country where you did. Your explanation should demonstrate that you understand the trade-offs of the trilemma, so please discuss the reasons why your country can only choose two of the three policy goals (Approximately 500 words)