Other Things Equal, If Exchange Rates Are Flexible, and If

question 31

Multiple Choice

Other things equal, if exchange rates are flexible, and if U.S. consumers increase their demand for Japanese goods at the same time that Japanese consumers increase their demand for U.S. goods, then we would expect the dollar to

• A) appreciate relative to the yen.
• B) depreciate relative to the yen.
• C) remain unchanged in value relative to the yen.
• D) appreciate, depreciate, or remain unchanged in value relative to the yen - impossible To determine without more information.

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Definitions:

Deposited

The process by which sediments, soil, and rocks are added to a landform or land mass, typically through the action of wind, water, or ice.

Hydrothermal Rock

Rock formed by the alteration of pre-existing rock through the action of hydrothermal fluids at high temperatures and pressures.

Magma

The molten or semi-molten natural material from which all igneous rocks are formed, found beneath the Earth's surface.

Underground

Beneath the surface of the Earth, including areas such as caves, tunnels, and mined spaces.