Question 13 1 pts Assume the United States and Japan operate with flexible excha

Question

Question 13 1 pts Assume the United States and Japan operate with flexible exchange rates. Other things equal, if the Federal Reserve in the United States raises U.S. interest rates relative to Japanese interest rates, then O the U.S. dollar will appreciate relative to the Japanese yen. O the Japanese yen will appreciate relative to the U.S. dollar. O Imports from Japan will be more expensive for U.S. businesses O Imports from the United States will be less expensive for Japanese businesses. Question 14 1 pts If the supply and demand for foreign exchange determines exchange rates and there is no government intervention, then the exchange rate system is referred to as: O a gold standard system. O a fixed exchange rate system. O a flexible exchange rate system. O a managed floating exchange rate system.

Explanation / Answer

13. the US dollar will appreciate relative to the Japanese yen.

When Fed increases interest rate in the US then people invest in US bonds, demand of US dollars increases in the market which causes appreciation of US dollar.

14. a flexible exchange rate system

Flexible exchange rate is an exchange rate determined by the supply and demand forces and there is no government intervention.

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