Which of the Following Caused a Decline in the Dollar-Yen

question 23

Multiple Choice

Which of the following caused a decline in the dollar-yen carry trade during 2008-09?

• A) Increase in risk appetite making the carry trade less attractive
• B) Decrease in interest rate differentials as the U.S. rates came down
• C) Increase in interest rate differentials as Japanese interest rates came down
• D) Decrease in interest rate differentials as the U.S. interest rates went up
• E) Decrease in interest rate differentials as the Japanese rates went up

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Definitions:

Quantity Effect

the change in the quantity of goods sold or consumed as a result of a change in price, holding other factors constant.

Profit

The financial gain or surplus remaining after all operating expenses, taxes, and costs have been subtracted from total revenue.

Duopoly

A market structure dominated by two firms, often leading to strategic behaviors and outcomes different from those in more competitive markets.

Two Firms

Refers to a market situation often analyzed in oligopoly models where only two companies dominate the supply in the market.