1.For each of the following events draw a diagram of the foreign exchange market for dollars in equilibrium, and show the effect on the demand curve and/or the supply curve of dollars as a result of each of the events. Does the dollar rise or fall in value? A) interest rates in the United States rise. B)Speculators become convinced that the future value of the Japanese yen will be higher relative to the dollar than it is today. 2. What would happen to the value of the dollar if prices in the United States increased more rapidly relative to prices in other countries? 3.Suppose interest rates in the U.S. are 3% while interest rates on comparable bonds in Japan are 1%. By how much is the exchange rate between the yen and dollar expected to change according to the interest-rate parity condition? 4.Suppose the Federal Reserve reduces interest rates while interest rates in Europe do not change. Make use of a graph of the foreign exchange market to show how this will affect the value of the dollar