Macro Money Exchange Work Any Takers???

HOMEWORK #9P

EXCHANGE RATES

Use Handout #18 and Chapter 9

1) Foreign real national income increases. Draw what happens in the exchange rate market. What happens to the exchange rate and quantity traded? (Remember both sides of market can be affected)

2) US national income decreases. Draw what happens in the exchange rate market. What happens to the exchange rate and quantity traded? (Remember both sides of market can be affected)

3) U.S. interest rates rise compared to the rest of the world. Draw what happens in the exchange rate market. What happens to the exchange rate and quantity traded? (Remember both sides of market can be affected)

4) The exchange rate is expected to fall in the future. Draw what happens in the exchange rate market. What happens to the exchange rate and quantity traded? (Remember both sides of market can be affected)