Author Question: If a dollar invested in the United States yields the same return as a dollar's worth of yen invested ... (Read 125 times)

kellyjaisingh · **on:** Jun 30, 2018

If a dollar invested in the United States yields the same return as a dollar's worth of yen invested in Japan, then it implies that:
a. purchasing power parity exists.
b. the exchange market is in equilibrium.
c. the dollar/yen exchange rate is fixed.
d. interest rate parity exists.
e. both the currencies are pegged to a fixed amount of gold.

Question 2

Suppose that the dollar value rises from 100 to 125 yen. As a result,
a. exports to Japan will likely increase.
b. Japanese tourists will more likely visit the United States.
c. U.S. businesses will be less likely to use Japanese shipping lines to transport their products.
d. U.S. consumers will more likely buy Japanese-made automobiles.