O Aplia: Student Quest X aplia final Flashcards X ii Courses. aplia.com/af/servl
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O Aplia: Student Quest X aplia final Flashcards X ii Courses. aplia.com/af/servlet/quiz?quiz action takeQuiz&quiz; probGuid-ONAPCOA801010000002fbcf1800600c c QA Search Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. EXCHANGE RATE (Rubles per won) Supply of Won i Demand for Won FOREIGN EXCHANGE The increase in Russian incomes causes the South Korean won to relative to the Russian ruble and causes the Russian ruble to relative to the South Korean won. Suppose the price level in Russia rises by 5%, while the price level in South Korea remains the same. That is the inflation rate in Russia is higher than in South Korea. Drag the appropriate curve or curves on the following graph to illustrate how this affects the market for South Korean won. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. HE O m Cortana. Ask me anything gestions 57:40 12:40 PM 6/14/2016Explanation / Answer
1) The increase in Russian income causes the South Korean Won will appreciate relative russian rubble and causes russian rubble to depreciate relative to Won. Because when income increases inflation increases and so the currency depreciates.
When inflation in Russia occurs or rises, goods in russia will become costlier hence will be demanded less, thus despreciating rubble. To which Demand for won will increase shifting the demand curve upward.
A higher price level in Russia causes rubble to depreciate relative to won.
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