Dollar Market/ the Value of the Dollar

							Dollar Market/ the Value of the Dollar

Part A:

Questions where appreciation or depreciation of the currency is the endogenous
effect/result:

Three Questions, all of which will be answered by your graph of this shift in the market
for the US Dollar. (This means you do not need a statement in response to these
questions): What will shift (D or S), will D or S increase or decrease in the E/1$ market
and is it the result appreciation or depreciation of the dollar ?

For all of these, draw the fully-labeled graph showing this one shift for the E/1$ market.

   1. U.S. consumers buy more Chinese-made consumer goods like flat-panel
      televisions and computers, household appliances, toys and clothing.
   2. A growing Chinese middleclass buys more Ford and GM-made cars.
   3. U.S. shifts from energy independence/ being a net oil exporter to foreign oil
      dependence/ being a net importer.
   4. Asian Central Banks and Middle Eastern Kingdoms buy U.S. T-bills (i.e. loan
      money to the U.S. government) This is part of the dollar’s role as a reserve
      currency for the entire world.
   5. Oil stops being denominated – sold/traded in petrodollars and instead oil trades
      and is priced in Euros (which would then in this context start being referred to as
      petro-euros)

Part B:

Questions where appreciation or depreciation of the currency is the exogenous shock

1. How will depreciation of the dollar affect (quantity of) U.S. imports?

2. How will depreciation of the dollar affect (quantity of) U.S. exports?

3. How will appreciation of the dollar affect (quantity) purchases of U.S. financial
instruments e.g. stocks bonds and mutual funds? Investors view the currency change as
an ongoing trend into the foreseeable future.

4. How will appreciation of the dollar affect (quantity) purchases of foreign financial
instruments e.g. stocks bonds and mutual funds? Investors view the currency change as
an ongoing trend into the foreseeable future.