Quote:
Originally Posted by rocketman7
1. The central bank would lower interest rates
2. The central bank would increase interest rates
3. The currency would increase in value
4. The currency would decrease in value
5. The deficit would increase and currency would decrease
6. The deficit would decrease and the currency would increase
7. The currency would increase in value
8. CAD would increase, JPY would decrease
9. A healthier consumer spends more than an unhealthy one
10. Service
rocketman7
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Hey Rocketman7,
Thanks for the reply and for participating it seems that you have a good handle on things here as well.
1. Correct - decrease in rates expected to try and spur growth
2. Correct - increase in rates expected to reign in inflation
3. Correct - currency should strengthen as more foreign capital flows in.
4. Correct - currency should weaken as more capital flows out.
5. Almost Correct - you are correct that the currency should weaken and you are correct that the current account balance should decrease however the current account does not necessarily have to be in deficit in this scenario it could simply become less positive.
6. Almost Correct - the currency should strengthen and the current account should increase, however this does not necessarily have to be from a deficit position.
7. Correct - the value of their currency should rise
8. Correct - the rate for CAD/JPY should increase as the Canadian Dollar strengthens and the Japanese Yen Weakens
9. Partially Correct - The answer that I am looking for here is that consumer spending makes up over 2/3rds of the US Economy.
10. Correct - The US is Service Based Economy.
Thanks again for participating it seems that you have a good handle on things as well and are ready to move forward.
Best Regards,
Dave