Question 5 Consider the following diagram showing the demand and supply of US dollars. E _0 13.2.50 m. :3 32.00 =5 191.50 C U .13 2100 U 9 $0.50 (I) U) C E . . . E 0 0.0 0.9 1.0 1.1 1.2 1.3 Quantity (lrillions of U.S. dollars per day) (a) What is the equilibrium exchange rate? (b) 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? (6) Show fixed exchange rate regime on a graph