Ch 5 Global Trade [AP & Reg]

30iftheexchangeratechangesfrom1y200to1y100wecansaythe

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Unformatted text preview: ncy. depreciating the dollar. depreciating Currency Appreciation and Depreciation Appreciation Depreciation D D2 $1.50 $1.00 .50 S D A Dollar price of another currency [yen] Equals increases International value of dollar falls (dollar depreciates) Exports increase Imports decrease [$1 to $1.50] D3 # of Yen Dollar price of another Currency [yen] decreases [$1 to .50] International Equals value of dollar rises (dollar appreciates) Imports increase Exports decrease Balance of Trade in Goods [“R” iis Recession] s Recession Balance [“ D1 $1.50 $1.00 .50 “Direct” relationship between “Y” & “M” D2 S D A D3 D # of Yen A Strong and Weak Dollar Strong Weak “Strong Dollar” Exports Imports Appreciation/Depreciation NS [14­19] 14. If the dollar depreciates relative to the peso, the peso will (appreciate/depreciate) relative to the dollar. 15. Appreciation of the dollar will tend to (increase/decrease) American imports & (increase/decrease) American exports. 16. The yen price of the dollar has decreased from 150=$1 t...
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