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Question 5 Consider the following diagram showing the demand and supply of US dollars. E _0 132.50 '0. D 32.00 191.50 C .9 1, 21.00

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Question 5 Consider the following diagram showing the demand and supply of US dollars. E _0 132.50 '0. D 32.00 191.50 C .9 1, 21.00 U 2 \"$0.50 CD 5:\" U , , A _C 3 o 0.3 0.9 1.0 L1 1.2 1.3 Quantity (trillions of US. dollars per cloy) (a) What is the equilibrium exchange rate? (13) What factors lead to an increase in the demand for US dollars? What is the impact of an increase in the demand for US dollars on equilibrium exchange rate? (c) What factors lead to an increase in the supply of US dollars? What is the effect of an increase in the supply of US dollars? (d) If the Japanese yen was 123 per dollar and now is 114 yen per dollar, has the yen appreciated or depreciated against the dollar? (e) Show xed exchange rate regime on a graph

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