A Decrease in the United States Interest Rate Relative to the Japanese

question 1

Multiple Choice

A decrease in the United States interest rate relative to the Japanese interest rate will cause the exchange rate, measured in yen per dollar, to ____ as international investors ____ their demand for dollar-denominated assets.

• A)rise; increase
• B)fall; increase
• C)rise; decrease
• D)None of these are correct because only the government can change the exchange rate.
• E)fall; decrease

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Definitions:

Risk Barrier

A hurdle or challenge that must be overcome to achieve a goal, often related to uncertainty or potential losses in business or investment.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through a population or society.

Information Sources

Various origins from which data or knowledge can be obtained, including books, internet, experts, or empirical observation.

Psychological Barrier

Mental or emotional resistance that inhibits a person from accepting, understanding, or acting upon a new idea or behavior.