Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 21, Problem 6P
To determine
(a)
To explain:
The effect on the supply curve of dollars in the market of currency.
To determine
(b)
To explain:
The effect on the supply curve of dollars in the market of currency.
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Suppose that the exchange rate falls from 84 yen per U.S. dollar to 71 yen per U.S. dollar.
What is the effect of this change on the quantity of U.S. dollars that people plan to sell in the foreign exchange market?
The quantity of U.S. dollars that people plan to sell in the foreign exchange market
A. decreases and the supply curve of U.S. dollars shifts leftward
B. increases and the supply curve of U.S. dollars shifts rightward
C. increases and a movement up along the supply curve for U.S. dollars occurs
D. decreases and a movement down along the supply curve of U.S. dollars occurs
If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market?
A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate.
B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate.
C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate.
D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.
In the foreign currency market for U.S. dollars:
Which of the following would be correct?
U.S. residents are on the supply curve
U.S. residents are on the demand curve
Foreign residents are on the supply curve
Foreign residents are on the demand curve
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