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:

Insurance Policy

A contract between an insurer and policyholder specifying the claims the insurer is legally required to pay.

Co-insurance Clause

A provision in an insurance policy stating that the insurer and the insured will share losses covered by the policy in a specified ratio.

Fireproof

A property of material or construction that provides resistance to fire, preventing or delaying the spread of fire.

Insured

The individual or entity covered by an insurance policy, who is entitled to benefits in case of a covered loss.