Ch 5 Global Trade [AP & Reg]

Value answer 2 due to the decrease in supply of us

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: f the exchange rate changes from $1=Y200 to $1=Y100, we can say the dollar has (apprec/deprec) in value & Japan’s exports to the U.S. (incr/decr). 31. Depreciation of the euro relative to the U.S. dollar would make a trip by an American to Europe (more/less) expensive. 32. Suppose that yesterday $1 would buy 800 South Korean won, but today will buy 810 won. We can conclude that the won has (depr/apprec) in value. Higher I. R.’s or Lower PL Appreciate the S2 D2 D1 S1 200 Price of the Yen depreciates as it takes more Yen to buy a dollar. Yen depreciates even more as it takes even more to buy a dollar. U.S Price level Decreases or U.S. Interest rates Increase 150 100 D D 50 0 Quantity of Dollars Japanese buy more U.S. X U.S. citizens buy M fewer Japanese A Increase in the demand for ’s Decrease in the supply of ’s for Appreciates Double Shifts: Although there are double shifts in some situations, Double Shifts: it doesn’t change the appreciation/depreciation answers. So – let’s just concentrate on the demand curve for each situa...
View Full Document

Ask a homework question - tutors are online