We Start with a 3 Percent Real Interest Rate in the United

question 33

Multiple Choice

We start with a 3 percent real interest rate in the United States and in Japan.Next,the real interest rate in Japan falls to 2 percent,and the U.S.real interest remains constant.As a result,

• A) the yen will depreciate and the dollar will appreciate.
• B) both the yen and the dollar will depreciate.
• C) the yen will appreciate and the dollar will depreciate.
• D) both the yen and the dollar will appreciate.

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Definitions:

Upward Sloping

A graphical depiction indicating that as one variable increases, another variable also increases, commonly used in supply curves.

Equilibrium Price

The price at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Legal Services

Professional services provided by lawyers or law firms to advise clients on legal rights and obligations, or represent them in legal matters.

Marginal Expenditure

The extra expense that comes from buying an additional unit of a product or service.