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# Figure: Change in the Demand for U. Dollars Reference: Ref 18-07 (Figure: Change in the Demand for U.

85.Figure: Change in the Demand for U.S. DollarsReference: Ref 18-07(Figure: Change in the Demand for U.S. Dollars) The change from D1 to D2 would occur, all other things being equal, if the: A.supply of euros decreases. B.demand for euros increases. C.demand for euros decreases. D.demand for dollars increases. 86.Figure: Change in the Demand for U.S. DollarsReference: Ref 18-07(Figure: Change in the Demand for U.S. Dollars) The change from D1 to D2 would occur, all other things being equal, if: A.interest rates are higher in Europe. B.interest rates are higher in the United States. C.interest rates in the United States and Europe are equal. D.inflation is higher in Europe. 88.If the U.S. dollar appreciates relative to currencies in other countries, then U.S. imports: A.and exports will both increase. B.and exports will both decrease. C.will decrease and exports will increase. D.will increase and exports will decrease. 89.Use this scenario to answer questions 146–147.Scenario: Exchange Rate between the U.S. and IndiaSuppose that initially the nominal exchange rate between U.S. dollar and Indian rupee is such that 40 rupees exchange for \$1. The nominal exchange rate has changed so that now 50 rupees exchange for \$1.Reference: Ref 18-08(Scenario: Exchange Rate between the U.S. and India) Consider the information provided. If the nominal exchange rate is 50 rupees per dollar and the inflation rate in India is 25%, while the aggregate price level has remained unchanged in the U.S., then: A.the real exchange rate between the U.S. dollar and the Indian rupee remains unchanged at 40. B.the real exchange rate between the U.S. dollar and the Indian rupee remains unchanged at 50. C.the real exchange rate between the U.S. dollar and the Indian rupee increases from 40 to 50. D.the real exchange rate between the U.S. dollar and the Indian rupee increases by more than 25%.

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