When Japanese Interest Rates Rise, and If Exchange Rate Expectations

question 55

Multiple Choice

When Japanese interest rates rise, and if exchange rate expectations remain unchanged, the most likely effect is that the supply of loanable funds provided by Japanese investors to the UnitedStates will ____, and U.S. interest rates will ____.

• A) increase; increase
• B) increase; decrease
• C) decrease; decrease
• D) decrease; increase

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given income and prices.

Commodity 1

A basic good used in commerce that is interchangeable with other goods of the same type, typically referred to when discussing market transactions.

Units of Y

A placeholder term generally referring to quantities or measurements of a variable Y.