Posted by Babi on .
For each of the following possible events, indicate whether the demand or supply curve for dollars would shift, the direction of the shift, the determinant of the change, the inflow or outflow effect on the balance of payments (and the specific account that would be affected), and the resulting movement of the equilibrium exchange rate for the value of the dollar. (a) American cars become suddenly more popular abroad. (b) Inflation rates in the United States accelerate. (c) The United States falls into a depression. (d) Interest rates in the United States drop. (e) The United States suddenly experiences rapid increases in productivity. ( f ) Anticipating a return to the gold standard, Americans suddenly rush to buy gold from the two big producers, South Africa and the Soviet Union. (g) War is declared in the Middle East. (h) The stock markets in the United States suddenly collapse.