The Following Question Are Based on the Following Diagrams, Showing

question 56

Multiple Choice

The following question are based on the following diagrams, showing the demand and supply of U.S. dollars in terms of Danish krone. For all cases D₀ and S₀ are initial demand and supply and D₁ and S₁ are new demand and supply. Assume an initial exchange rate of 9 krone to $1.

-In 1985,the Japanese yen was quoted at 235 per dollar.In 2013,the quoted price was 104 per dollar.As a result,other things being equal,one would expect that

• A) Japanese goods will become more expensive for U.S. buyers.
• B) U.S. goods will become more expensive for Japanese buyers.
• C) the Japanese will import less from and export more to the United States.
• D) gold will flow from Japan to the United States.
• E) the U.S. demand curve for yen will shift to the right and the dollar price of yen will fall.

---

Definitions:

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage.

Total Revenue

The total amount of money a firm receives from the sale of its goods or services before any expenses are subtracted.

Quantity Demanded

The total amount of a good or service consumers are willing to purchase at a specific price level at a given time.

Elastic Demand

Elastic demand indicates that the quantity demanded of a good or service significantly changes in response to a change in price.