Exchange rate (yen per $) 70 80 90 100 110 120…
Exchange rate (yen per $) 70 80 90 100 110 120 Quantity Supplied in U.S. $’s (Billions) 20 30 40 50 60 70 Quantity Demanded in U.S. $’s (Billions) 80 70 60 50 40 30 (a) Graph the demand and supply curves on your scratch paper (be sure to label the vertical and horizontal axes, provide numerical values for each axes, and label the equilibrium price P* and equilibrium quantity Q*). (b) What is the equilibrium exchange rate yen per dollar (how many yen do you get for a dollar)? (c) What is the equilibrium exchange rate in dollars per yen (how many dollars do you get for a yen)? (d) Which would you prefer to have, $5,000 dollars or 500,000 yen, if your bank will exchange yen for dollars at the equilibrium exchange rate from part (a). You will need to provide an explanation and show your calculations to support your answer.