Ch 5 Global Trade [AP & Reg]

S rises change and in the international value of the

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Unformatted text preview: st rate in the U.S. increases to 8% while the real interest rate in real real Japan decreases to 6%. a. How & why will financial capital flows be affected financial capital by this change in real interest rates? [financial capital, not real capital] not D1 S b. Using a correctly labeled graph for the yen graph D2 market, show and explain how the value of market $1.15 E1 the yen will change relative to the value of A $1.00 the dollar. E2 c. Explain how the change in the value of the yen will affect each of the following in the U.S. (D) # of Yen (1.) Imports from Japan Imports (2.) Exports to Japan Exports Yen Price of Dollar 1. Assume that the U.S. trades with Japan. Draw a correctly labeled graph that of the foreign exchange market for the U.S. dollar . Let’s say that of Let’s United States output [GDP] decreases. Show & explain how the supply United of the U.S. dollar will be affected in the foreign exchange market .. of S2$ D$ S1$ Y120 Y100 E2 E1 Answer 1: The decrease in Answer real U.S. output will cause job losses in the U.S...
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This note was uploaded on 07/20/2012 for the course ECON 2106 at GCSU.

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