Assume That the Exchange Rate Between the Dollar and the Yen

question 125

Multiple Choice

Assume that the exchange rate between the dollar and the yen is ¥60 = $1. Suppose the exchange rate changes to ¥100 = $1. Because of the change:

• A)Australian exports should increase and Australian imports should increase.
• B)Australian exports should decrease and Australian imports should increase.
• C)Australian exports should increase and Australian imports should decrease.
• D)Australian exports should decrease and Australian imports should decrease.

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Definitions:

Convex

In geometry and economics, convex refers to a shape or function that curves outward or has a bulging shape, often indicating a relationship where marginal effects increase over a range.

Concave

Describes a curve or surface that is curved inward, resembling the interior of a circle or sphere.

Budget Line

The budget line represents the combination of goods and services that a consumer can purchase with their given income, keeping in consideration the prices of those goods.

Money Income

Money income refers to the total amount of monetary earnings received by an individual or household, including wages, salaries, bonuses, and income from investments.