Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 32, Problem 5QCMC
To determine
The impact of capital inflow on the exchange rate and interest rate.
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If the Japanese yen appreciates against the U.S. dollar
a. Americans should find Japanese goods are now less expensive
b. Japanese residents would find Japanese goods are relatively less expensive than American goods
c. U.S. goods should have an easier time competing against Japanese goods in both countries
d. Japanese goods should have an easier time competing against U.S. goods in both countries
An increase in the supply of U.S. dollars by the Federal Reserve will
a. raise the value of the dollar because it will stimulate U.S. economic growth
b. reduce the value of the dollar because of inflation fears in the United States
c. decrease the value of the dollar because it will force other countries to raise their interest rates
d. raise the value of the dollar because it will lead to higher U.S. interest rates
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a. rise; right
b. rise; left
c. fall; right
d. fall; left
Give the answer with detail explanation.
Chapter 32 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.arrow_forwardWill an increase in attractiveness of the US as a tourist destination DECREASE or INCREASE the value of US dollar?arrow_forwardA civil war abroad causes foreign investors to movetheir funds to the safe haven of the United States,leading to _________U.S. interest rates and a_________ U.S. dollar.a. higher; weakerb. higher; strongerc. lower; weakerd. lower; strongerarrow_forward
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