If U$.$S$.$ inflation suddenly increased while European inflation stayed the same, there

A$)$ an increased U$.$S$.$ demand for euros and an increased supply of euros for sale.

B$)$ a decreased U$.$S$.$ demand for euros and an increased supply of euros for sale.

C$)$ a decreased U$.$S$.$ demand for euros and a decreased supply of euros for sale.

$$ D$)$ an increased U$.$S$.$ demand for euros and a decreased supply of euros for sale.

If the U$.$S$.$ and Japan engage in much financial flows but little trade, $$ directly. influences their exchange rate the most. If the U$.$S$.$ and Switzerland engage in much trade but little financial flows, directly influences their exchange rate the most.

A$)$ interest rate differentials', interest rate differentials

B$)$ inflation and interest rate differentials; interest rate differentials

C$)$ income and interest rate differentials; inflation differentials

D$)$ interest rate differentials; inflation and income differentials

E$)$ inflation and income differentials; interest rate differentials

Any event that reduces the U$.$S$.$ demand for Japanese yen should result in a$($an$)q,$ in the value of the Japanese yen with respect to $q,$ other things being equal.

A$)$ increase; U$.$S$.$ dollar

B$)$ increase; nondollar currencies

C$)$ decrease; nondollar currencies

D$)$ decrease; U$.$S$.$ dollar

Which of the following is not mentioned in the text as a factor affecting exchange rates?

A$)$Relative interest rates, B$)$ relative inflation rates, C$)$ government control D$)$expectations$.$ E$)$ all of the above are mentioned in the text as factors affecting exchange rates.