Which of the following occurs if the expected profit increases? ...

[justinmsk]

Which of the following occurs if the expected profit increases?
 
  A) Investment demand increases and the demand for loanable funds curve shifts rightward.
  B) The quantity of investment demanded decreases and there is a movement up along the demand for loanable funds curve.
  C) The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve.
  D) The savings increases and the supply of loanable funds curve shifts rightward.
  E) Investment demand decreases and the demand for loanable funds curve shifts leftward.

Question 2

In the figure above, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the foreign exchange rate?
 
  What will be an ideal response?

[ankilker]

Answer to Question 1

A

Answer to Question 2

The figure above shows the effect of the increase in the U.S. interest rate. The demand for dollars increases and the demand curve shifts rightward. The supply of dollars decreases and the supply curve shifts leftward. The equilibrium exchange rate rises, to 100 yen per dollar in the figure.

[justinmsk]

Correct answers!

[ankilker]

Great! Please up vote