Question: 2. (a) Assume that there is perfect capital mobility between the U.S. and Japan. Latest data show that economic growth in the U.S. was unexpectedly

2. (a) Assume that there is perfect capital mobility between the

2. (a) Assume that there is perfect capital mobility between the U.S. and Japan. Latest data show that economic growth in the U.S. was unexpectedly strong in the last quarter and consumer prices rose more than that had been forecast. If the economic conditions in Japan have been stable, how will the forward exchange rate between the yen () and the U.S. dollar ($), F#/s, respond to the latest economic news? Explain why.

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