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(10 points) Explain how the Fed manipulates the Federal Funds Rate in
order to achieve macroeconomic objectives.
9. (TCO E and I) Let the exchange rate be defined as the number of
dollars per Japanese yen. Assume there is an increase in U.S. interest
rates relative to that of Japan.
(a.) (10 points) Would this event cause the demand for the dollar to
increase or decrease relative to the demand for the yen? Why?
(b.) (10 points) Has the dollar appreciated or depreciated in value
relative to the yen?
(c.) (10 points) Does this change in the value of the dollar make imports
cheaper or more expensive for Americans? Are American exports
cheaper or more expensive for importers of U.S. goods in Japan?
Illustrate by showing the price of a U.S. e-reader in Japan before and
after the change in the exchange rate.
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ECON 545 Week 1 DQ 1 Supply and Demand (NEW)
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Below is a recommended topic for this discussion. If your instructor
chooses a different “Making the Connection” from this weeks’ readings