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8. When the dollar depreciates relative to the euro, European goods will tend to become (more expensive, less expensive) for Americans. 9. If interest rates
8. When the dollar depreciates relative to the euro, European goods will tend to become (more expensive, less expensive) for Americans. 9. If interest rates in the U.S. rise, demand forthe dollar will (rise, fall), resulting in an (appreciation, depreciation) of the U.S. dollar. 10. Inflation in Venezuela results in the (appreciation, depreciation) of their currency, the boiivar. 11. Devaluation of a currency results in an ofcial (rise, decrease) in its value relative to other currencies. 12. If the equilibrium exchange rate changes so that the dollar price of the Mexican peso increases, the dollar has (appreciated, depreciated) in value. 13. A decrease in the U.S. demand for Chinese goods will (increase, decrease) the demand for Chinese yuan and (increase, decrease) the dollar price of the yuan. 14. If the exchange rate for one U.S. dollar changes from 1 to 1.3 , there has been aln (appreciation, depreciation) in the value of the euro. 15. If the exchange rate for one British pound changes from $1.40 to $1.50, there has been aln (appreciation, depreciation) in the value of the British pound. Part 3 - Draw lt- Assume that the US and Kenya are trading partners. Draw correctly labeled foreign exchange graphs for the US. Dollar and the Kenyan Shilling and complete the following. 16.Show what happens on both US. Dollar Kenyan Shilling graphs if Americans demand more Kenyan products. 17.What happens to the value of the US dollar? 18.What happens to the value of the Kenyan Shilling? US. Dollar Kenyan Shilling 19. Redraw the original foreign exchange graphs. Assume instead that the interest rate in the US increases significantly. Show what happens on both graphs. 20. Explain why both the demand for dollars and the supply of dollars change
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