2. 1 value: .00 points How would each of the following be likely to affect the v
ID: 1116800 • Letter: 2
Question
2. 1 value: .00 points How would each of the following be likely to affect the value of the dollar, all else being equal? a. The European Central Bank becomes less concerned about European inflation and more concerned about an impending recession in Europe The value of the dollar (Click to select) b. European computer firms switch from U.S.-produced software to software produced in India, Israel, and other nations The value of the dollar (Click to select) c. As East Asian economies grow, international financial investors become aware of many new, high-return investment opportunities in the region. The value of the dollar (Click to select)Explanation / Answer
[02:26, 12/1/2017] Samyak: a) Appreciates.
European Banks will reduce the interest rate in Europe and hence, demand for US dollar would increase due to higher returns in US markets as compared to European markets.
b) Depreciates.
US exports will decrease and hence, demand for US dollars will decrease leading to a Depreciation of Dollar
c) Depreciates
Again, demand for US Dollar would decline and demand for East Asian currencies would increase, leading to a depreciation of Dollar.
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