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You learned that 3 factors could cause shifts in the supply and demand curves of a foreign exchange: expectations about future exchange rates; differences across
You learned that 3 factors could cause shifts in the supply and demand curves of a foreign exchange: expectations about future exchange rates; differences across countries in rates of return (i.e. interest rate); and relative inflation. Suppose this is the foreign exchange market of Japanese yen. Match the right with the left side correctly: 1-An article on the Wall Street Journal predicts that the yen is likely to depreciate 2-Interest rates rise in Japan as compared with the U.S. 3-Japan experiences higher inflation rates -Demand of yen shifts to the left and supply of yen shifts to the right, depreciating the dollar -Demand of yen shifts to the left and supply of yen shifts to the right, appreciating the dollar -Demand of yen shifts to the right and supply of yen shifts to the left, depreciating the dollar -Demand of yen shifts to the right and supply of yen shifts to the left, appreciating the dollar
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