Suppose Interest Rates Are 3 Percent in Japan and 6

question 52

Multiple Choice

Suppose interest rates are 3 percent in Japan and 6 percent in Canada. The current value of the exchange rate is 110 Japanese yen per dollar, and it is generally expected that in one year the exchange rate will be 106.7 yen per dollar. However, new information is released that changes everyone's expectations, and they think the exchange rate in one year will still be 110 yen per dollar. As a result of this change,

• A)the demand for Canadian dollars increases.
• B)the supply of Canadian dollars decreases.
• C)people will borrow in Canada and lend in Japan.
• D)the demand for Canadian dollars decreases.
• E)A and B.

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Definitions:

Schizophrenia Spectrum

A range of disorders characterized by abnormalities in one or more areas such as thoughts, perceptions, emotions, or behavior.

GAF Scale

The Global Assessment of Functioning scale, a numeric scale (0 through 100) used by mental health clinicians and physicians to rate subjectively the social, occupational, and psychological functioning of adults.

Cognitive Functioning

The mental processes involved in obtaining knowledge and comprehension, including thinking, knowing, remembering, judging, and problem-solving.

Overall Functioning

An individual's general level of performance in various areas of life, often considered in psychological and medical contexts to assess health or disability.