Question

Suppose interest rates in the United States, but they don’t rise in other nations. As a result of this change

The U.S. dollar appreciates

The U.S. dollar depreciates

U.S. exports will increase

U.S. imports will decrease

Price levels in the unites states will increase

Suppose Americans began purchasing real assets in Europe. How would this impact the foreign exchange market for the euro and the dollar price of the euro?

Decrease/increase

Increase/ decrease

Increase/increase

Decrease/Decrease

Decrease/Not change

Suppose interest rates rise in the United States, but they don’t rise in other nations, what is the impact of flow of the financial capital, the value of the dollar, and U.S. net export (based on the changing value of the dollar)?

Capital flow/ Value of the U.S. dollar/ Net exports

Inflow/appreciate/Increase

Inflow/appreciate/decrease

Inflow/depreciates/increase

Outflow/depreciates/increase

Outflow/appreciates/decrease

If the U.S experiences an increase in exports, ceteris paribus, then

The U.S. dollar will appreciate because of increased supply of U.S. dollars by foreign nations

The U.S. dollar will depreciate because of increased supply of U.S. dollars by foreign nations

The U.S. dollar will appreciate because of increased demand of U.S. dollars by foreign nations

The U.S. dollar will depreciate because of increased demand of U.S. dollars by foreign nations

The U.S, dollar will depreciate and the U.S will import more foreign goods

Answer 1

Answer 1 : Suppose interest rate rises in the united states, but they dont rise in other nations. As a result there is increase in inflationary pressure. It is one of the monetary policy that fed has been used to achive maximum employment and stable price level. As a result there is US Dollar apperication.   This shows that increase in interest rate tend people to save more and spend less in an economy.

Answer 2 : When american start purchasing real assets in the europe. The impact is that there is increase in the forgien exchange market for euro and increasein the dollar price of the euro market. As a result that real assets has been purchased by them so the increase in exchange rate market as well as increase in the price of dollar in the market as they are investing in real assets.

Answer 3 : As interest rate has been rised than the financial capital has been inflow, value of US Dollar appreciates and increase in the value of net exports. This result is that when interest rate rises the capital has been inflow and the value of the US Dollar has been appericates and increased in the value of the net export in the country because investment in the US country has become attractive place of investment.

Answer 4 : If US experienced an increase in export, certies paribus than the US Dollar will appericate because of increase demand for US Dollar by forgien nation . This shows that dollar has been appericated when import has been increased and US goods has been more attractive so demand for US dollar has been increased at faster speed.