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- Assume that the Japanese government wants to reduce inflation. Which of the following would be an appropriate action for the Japanese government? A. Sell yen for foreign currency B. Decrease interest rates C. None of the options are correct D. Buy yen with foreign currency E. Increase interest ratesWhich of the following is an example of a nominal anchor? a. Inflation Rate b. Money Supply c. Exchange Rate d. All of the above are correctExplain why you agree or disagree with the following statements: A country’s currency will appreciate if its inflation rate is less than that of the rest of the world.
- Which of the following best describes the relationship between inflation and the value of the dollar? A) Inflation increases the value of the dollar while deflation decreases the value of the the dollar. B) Inflation decreases the value of the dollar while deflation increases the value of the dollar. C) Neither inflation nor deflation affect the value of the dollar. D) Both inflation and deflation increase the value of the dollar.Empirical studies find that exchange rates are much more variable then inflation differentials. How can you explain this empirical result?Relative inflation rates affect interest rates, exchange rates, the overall economic health of a country, and the operations and profitability of multinational companies. Consider the following statement: Countries with lower inflation rates will have lower interest rates. The currency of a country with a higher inflation rate than Japan’s inflation rate will (appreciate or depreciate) over time against the yen.
- The purchasing power parity hypothesis implies that an increase in inflation in one country relative to another will over a long period of time"The value of the currency of a domestic country tends to increase if its inflation rate is significantly lower than that of other countries". Right or wrong? Explain your answer.Any change in the global monetary system(please assess the increasing use of currencies other than the US dollar for oil trading).