Japan and the United States are major trading partners and the exchange rate between the Japanese yen and the United States dollar is determined in a flexible foreign exchange market. (a) Assume real income increased in the United States. Draw a correctly labeled graph of the foreign exchange market for the yen, and show the effect of the increased real income in the United States on the equilibrium exchange rate for the yen. (b) Will each of the following increase, decrease, or stay the same as a result of the increase in the United States real income? (i) Japan's net exports. Explain. (ii) Unemployment in Japan. Explain. (iii) Japan's long-run aggregate supply_ (c) Assume instead household savings increased in the United States. Draw a correctly labeled graph of the loanable funds market in the United States, and show the effect of the increase in household savings on the equilibrium real interest rate.

Japan and the United States are major trading partners and the exchange rate between the Japanese yen and the United States dollar is determined in a flexible foreign exchange market. (a) Assume real income increased in the United States. Draw a correctly labeled graph of the foreign exchange market for the yen, and show the effect of the increased real income in the United States on the equilibrium exchange rate for the yen. (b) Will each of the following increase, decrease, or stay the same as a result of the increase in the United States real income? (i) Japan's net exports. Explain. (ii) Unemployment in Japan. Explain. (iii) Japan's long-run aggregate supply_ (c) Assume instead household savings increased in the United States. Draw a correctly labeled graph of the loanable funds market in the United States, and show the effect of the increase in household savings on the equilibrium real interest rate.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A, B, and B(I) or however many you can do please

Name:
Japan and the United States are major trading partners and the exchange rate between the Japanese
yen and the United States dollar is determined in a flexible foreign exchange market.
(a) Assume real income increased in the United States. Draw a correctly labeled graph of the foreign
exchange market for the yen, and show the effect of the increased real income in the United States on
the equilibrium exchange rate for the yen.
(b) Will each of the following increase, decrease, or stay the same as a result of the increase in the
United States real income?
(i) Japan's net exports.
Explain._
(ii) Unemployment in Japan.
Explain.
(iii) Japan's long-run aggregate
supply_
(c) Assume instead household savings increased in the United States. Draw a correctly labeled graph of
the loanable funds market in the United States, and show the effect of the increase in household savings
on the equilibrium real interest rate.

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