Question 9 1 pts Suppose legal barriers in the United States are reduced to allow more imports of electronic consumer goods produced in Japan. All else remaining equal, this should lead to which of the following? An increase in demand for U.S. dollars An decrease in supply of Japanese Yen An increase in supply of Japanese Yen An increase in supply of U.S. dollars
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Step 1: When the US reduces legal barriers to allow more imports of electronic consumer goods from Japan, it means that the US will be buying more goods from Japan. Show more…
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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. 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. What would happen in the loanable funds market in the United States with the supply of loanable funds, and show the effect of the increase in household savings on the equilibrium real interest rate. d) Based on the change in the equilibrium real interest rate identified in part (c), what will happen to financial capital flows to the United States? e) Based on your answer to part (d), what will happen to the international value of the dollar in the foreign exchange market? Explain. f) What will happen to net exports in the USA? Explain.
Akash M.
Supply of dollars Yen/dollar exchange rate e Demand for dollars 0 Quantity of dollars traded Refer to the Figure above of the U.S. dollar market. Let's start with the initial demand curve, the initial supply curve, and initial equilibrium. If Japan experiences an economic expansion and hence incomes increase while the U.S. economy remains stagnant, then assuming all else constant, we will represent this event as leading to: - a rightward shift of the supply curve for dollars - a leftward shift of the supply curve for dollars - a rightward shift of the demand curve for dollars - rightward shifts of both the demand curve for dollars and the supply curve for dollars
Suppose the United States and Japan are the only two trading countries in the world. What will happen to the value of the U.S. dollar if the following occur, other things equal? a. Japan relaxes some of its import restrictions. b. The United States imposes some import tariffs on Japanese goods. c. Interest rates in the United States rise dramatically. d. A report indicates that Japanese cars last much longer than previously thought, especially compared with American cars.
Majid B.
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