please show work What are the effects of the following on the Yen/US dollar exchange rate (briefly
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please show work
What are the effects of the following on the Yen/US dollar exchange rate (briefly explain):
an increase in US. imports of merchandise
a Federal Reserve purchase of foreign exchange
a sharp increase in the US rate of inflation
higher US interest rates
an increase in US investments overseas through international mutual funds.
a surge in foreign direct investment into the US
larger US Federal budget deficits accompanied by a tight monetary policy
2. If the yen/dollar exchange is 122 yen per dollar, and the US. annual inflation rate is
5% while the Japanese annual inflation rate is 1%, what is the purchasing power parity exchange rate? Is the dollar overvalued or undervalued versus the yen. Is purchasing power parity a good measure of what the exchange rate should be?
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