1. If foreign exchange traders become convinced that the value of the yen will r

Question

1. If foreign exchange traders become convinced that the value of the yen will rise against the dollar in the future, the likely result is that:

A) demand for the yen will fall in anticipation.

B) the current value of the yen against the dollar will rise.

C) the current value of the yen against the dollar will fall.

D) nominal interest rates in Japan will fall.

2. What would happen in the foreign exchange market if the European Central Bank raises European interest rates?

A) There will be a decline in the value of the euro.

B) There will be a decline in the value of the dollar.

C) There will be an increase in the value of the dollar.

D) U.S. interest rates will decline

A) There will be a decline in the value of the euro.

B) There will be a decline in the value of the dollar.

C) There will be an increase in the value of the dollar.

D) U.S. interest rates will decline

Explanation / Answer

1)

The correct answer is option A.

The demand for Yen will get reduced as the value of Yen gonna raise in the near future. If the value of the Yen increases the demand for Yen will get reduced.

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