Ch 5 Global Trade [AP & Reg]

Ifthedollardepreciatesrelativetothepesothe

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Unformatted text preview: r Increase in taste for U.S. goods Increase in U.S. Interest Rates Decrease in U.S. Price Level Decrease in U.S. Growth Rate The Market for Dollars Yen Price of Dollar Exchange Rate: $1 = ¥100 P Y150 Y100 D1$ Decrease in U.S. Currency Price D2 Y looking for $’s looking $’s S$ $’s looking for Y $’s E2 D A Yen depreciates Yen E1 appreciates Y50 Y50 E3 D3 Depreciation of Dollar Decrease in Taste 0 Decrease in In. Rates Increase Price Level Increase Growth Rate Increase in Currency Price D QE Quantity of Dollars A Dollar price of one pound EXCHANGE RATE: $2 = £1 P $3 $2 D S E2 Dollar Dollar depreciates Dollar appreciates $1 Depreciation of Pound Decrease in taste for Brit. goods Decrease in British Interest Rates Increase in British Price Level Increase in British Growth Rate Appreciation of the pound Increase in taste for British goods Increase in British Interest Rates Decrease in British Price Level Decrease in British Income E1 D2 E3 D D3 Quantity of pounds A Q Y150 Y100 Y50 Y50 Y looking f...
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