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The Following Figure Depicts the Demand for Japanese Yen in the Foreign

Question 122

Multiple Choice

The following figure depicts the demand for Japanese yen in the foreign currency exchange market. Use this figure to answer the following questions. The following figure depicts the demand for Japanese yen in the foreign currency exchange market. Use this figure to answer the following questions.   -If interest rates in the United States fall,then we can expect that the demand curve A)  will not shift,because interest rates are not related to exchange rates. B)  will not shift,because interest rates only affect the supply curve. C)  can either increase from D<sub>1</sub> to D<sub>2</sub> or decrease from D<sub>1</sub> to D<sub>3</sub>. D)  will increase from D<sub>1</sub> to D<sub>2</sub>. E)  will decrease from D<sub>1</sub> to D<sub>3</sub>.
-If interest rates in the United States fall,then we can expect that the demand curve


A) will not shift,because interest rates are not related to exchange rates.
B) will not shift,because interest rates only affect the supply curve.
C) can either increase from D1 to D2 or decrease from D1 to D3.
D) will increase from D1 to D2.
E) will decrease from D1 to D3.

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