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S https:/www.mathod.com/student/PlayerHomework aspx?homeworkad 5021561448questionld 18flushed-false&cld 52160938 BBAO162 Appl Macroeconomics-Business (ECO-331-01A) Homework: WS 4.4 Problems (Ch 9, 14, 15) Score: 0 of 9 pts 9.1 Study Plan Problem 4 Suppose that yesterday the U.S. dolar was trading at 100 yen per dollar on the foreign exchange market Today, the U.S. dollar was trading at 105 yen per dollar The events in the foreign exchange market, everything else remaining the same that could have resulted in this change in the value of the U.S. dollar include O A. a decrease in the Japanese interest rate and a doe in the expected future exchange rate of the US dollar O B. a fall in the expected future exchange rate of the US. dollar and a decrease in the U S. interest rate O C. a rise in the expected future exchange rate of the U.S. dollar and a decrease in the U.S. interest rate O D. a decrease in the Japanese interest rate and a fall in the expected future exchange rate of the U S dollar ick to select your answer and then click Check Answer part

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Ans. The option (A) is correct.

A decrease in the japanese interest would cause the capital outflow from the Japan to abroad. Investors will invest their money in other countries where interest rate is higher than interest rate in Japan. This would cause the Japanese currency Yen to depreciate against US Dollar. Again, a rise in the expected value of US Dollar in future will cause a rise in demand for US Dollar at present which will increase the value of US Dollar.

Hence, Japanese currency depreciate against US Dollar.

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