Refer to following table, in which Qd is the quantity of yen demanded, P is the dollar price of yen, Qs is the quantity of yen supplied in year 1, and Q' is the quantity of yen supplied in year 2. All quantities are in billions. પત 80 120 160 200 Buy P 140 Foreign purchas 135 130 125 Assume that the exchange rate is fixed against the dollar at the equilibrium exchange rate that occurs in year 1. Also suppose that Japan and the Canada are the only two countries in the world. Decrease Qs 160 120 80 40 In year 2, what quantity of yen would the Japanese government have to buy or sell to balance its capital and financial account with its current account? # Qs' 240 200 billion yen In what specific account would this purchase or sale show up in Japan's balance of payments statement? 160 120 Would this transaction increase Japan's stock of official international reserves or decrease its stock?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Refer to following table, in which Qd is the quantity of yen demanded, P is the dollar price of yen, Qs is the quantity of yen supplied in
year 1, and Q' is the quantity of yen supplied in year 2. All quantities are in billions.
પત
80
120
160
200
Buy
P
140
Foreign purchas
135
130
125
Assume that the exchange rate is fixed against the dollar at the equilibrium exchange rate that occurs in year 1. Also suppose that
Japan and the Canada are the only two countries in the world.
Decrease
Qs
160
120
80
40
In year 2, what quantity of yen would the Japanese government have to buy or sell to balance its capital and financial account with its
current account?
#
Qs'
240
200
billion yen
In what specific account would this purchase or sale show up in Japan's balance of payments statement?
160
120
Would this transaction increase Japan's stock of official international reserves or decrease its stock?
Transcribed Image Text:Refer to following table, in which Qd is the quantity of yen demanded, P is the dollar price of yen, Qs is the quantity of yen supplied in year 1, and Q' is the quantity of yen supplied in year 2. All quantities are in billions. પત 80 120 160 200 Buy P 140 Foreign purchas 135 130 125 Assume that the exchange rate is fixed against the dollar at the equilibrium exchange rate that occurs in year 1. Also suppose that Japan and the Canada are the only two countries in the world. Decrease Qs 160 120 80 40 In year 2, what quantity of yen would the Japanese government have to buy or sell to balance its capital and financial account with its current account? # Qs' 240 200 billion yen In what specific account would this purchase or sale show up in Japan's balance of payments statement? 160 120 Would this transaction increase Japan's stock of official international reserves or decrease its stock?
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