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Part A (Answer all questions by selecting the most appropriate choice) (20 points) 1. When short-term interest rates become lower in Tokyo than in New York, interest arbitrage operations will most likely result in a( a) : a. Increase in the spot price of the yen b. Increase in the forward price of the dollar c. Sale of dollars in the forward market d. Purchase of yen in the spot market 2. Which of the following is considered a capital inflow? a. A sale of U.S. financial assets to a foreign buyer b. A loan from a U.S, bank to a foreign borrower c. A purchase of foreign financial assets by a U.S. buyer d. A U.S. citizen's repayment of a loun from a foreign bank 3. Which example of market expectations causes the dollar to appreciate against the yen-expectations that the U.S. economy will have: a. Faster economic growth than Japan b. Higher future interest Fates than Japan c. More rapid money supply growth than Japan d. Higher inflation rates than Japan