Foreign Exchange Practice Need a stress ball. Business, Computers, & Information Technology Unit Chapter 7 38

Practice 1. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if American tourists increase visits to Japan. Dollar Market Yen Market S1 S1 Yen price/ Dollar S Dollar price/Yen S D1 D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Supply increases Dollar Depreciates Demand increases Yen Appreciates Submit RESET

Practice 2. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if the US government significantly decreases personal income tax. What happens to U.S. exports and imports? Dollar Market Yen Market S1 S1 Yen price/ Dollar Dollar price/Yen S D1 S D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Supply increases Dollar Depreciates Exports increase Demand increases Yen Appreciates Submit RESET

Practice 3. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if inflation in Japan rises significantly faster than in the US. What happens to U.S. exports and imports? Dollar Market Yen Market S1 S1 Yen price/ Dollar Dollar price/Yen S S D1 D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Supply decreases Dollar Appreciates Exports decrease/Imports increase Demand decreases Yen Depreciates Submit RESET

Practice Supply increases Demand increases Yen Appreciates 4. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if Japan has a large budget deficit that increases Japanese interest rates. Dollar Market Yen Market S1 S1 Yen price/ Dollar Dollar price/Yen S S D1 D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Supply increases Dollar Depreciates Demand increases Yen Appreciates Submit RESET

Practice 5. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if Japan places high tariffs on all US imports. What happens to U.S. exports and imports? Dollar Market Yen Market S1 S1 Yen price/ Dollar Dollar price/Yen S S D1 D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Demand decreases Dollar Depreciates Exports decrease Supply decreases Yen Appreciates Submit RESET

Practice 6. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if the US suffers a large recession. What happens to U.S. exports and imports? Dollar Market Yen Market S1 S1 Yen price/ Dollar Dollar price/Yen S S D1 D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Supply decreases Dollar Appreciates Exports decrease Demand decreases Yen Depreciates Submit RESET

Practice 7. What happens to the markets and values of the U.S. Dollar and the Japanese Yen if he US Federal Reserve sells bonds at high interest rates. Dollar Market Yen Market S1 S1 Yen price/ Dollar Dollar price/Yen S S D1 D1 S1 S1 P P D1 D1 D D Q Q of Dollars Q Q of Yen D D S S D D S S Demand increases Dollar Appreciates Supply increases Yen Depreciates Submit RESET

That’s It