View gn Layout References Mailings Review 10 A+ A- A A E. U .abe XX A. Aaliecode AaBcDdEe AADOCCDDLE AABOCCOD Normal No Spacing LUUITEICS OR LIC CALI Heading 1 Heading 2 Heading CIGLC UT LITCHI LUITERLIES! RELATIVE INCOME LEVELS 1. Assume that the United States experiences a significant decline in income, while Japan's income remains steady. This event should place pressure on the value of the Japanese yen, other things being equal. (Assume that interest rates and other factors are not affected.) 2. Assume that income levels in the United Kingdom start to rise, while U.S. income levels remain unchanged. This will place_pressure on the value of the British pound. Also, assume that U.S. interest rates rise, while British interest rates remain unchanged and that no inflation is expected in either country. This will place pressure on the value of the British pound. GOVERNMENT CONTROLS 1. Assume that the United States places a strict quota on goods imported from China and that China does not retaliate. Holding other factors constant, this event should immediately cause the U.S. demand for Chinese yuan and the value of the yuan to 2. Assume that Japan places a strict quota on goods imported from the United States and the United States places a strict quota on goods imported from Japan. This event should immediately cause the U.S. demand for Japanese yen to __ and the supply of Japanese yen to be exchanged for U.S. dollars to 3. Other things the same, if the exchange rate changes from 7 Yen per dollar to 0.6 Yen per dollar, the dollar has and consumers could buy. foreign goods. 4. Other things the same, if the exchange rate changes from 4.3 Krone per dollar to 8.4 Krone per dollar, the dollar has so US goods become expensive relative to foreign goods 5. An appreciation of the U.S. exchange rate induces U.S. consumers to buy domestic goods and foreign goods. 6. Other things the same, if the exchange rate changes from 6.2 Dinar per dollar to 4.3 Dinar per dollar, then the dollar has which causes US net exports to to