(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
In part C, you are asked to analyze the effect of a dramatic rise in US interest rates.
(Description)
The first graph from the first slide is shown.
The following text is briefly written above the graph:
Suppose the United States and Japan are the only two trading countries in the world. What will happen to the value of the U.S. dollar if the following occur, toher things equal?
Interest rates in the United States rise dramatically then the dollar will (appreciate, depreciate), blank line.
(Speaker)
We have to be careful as a change in the intersect rate will make the Japanese yen less attractive for US investors but the dollar more attractive for Japanese investors.
A dramatic rise in the US interest rates will attract Japanese buyers of American assets.
There will be an increase in the demand for US dollars by Japanese investors seeking a higher interest rate and a decrease in the supply of US dollars.
As US investors elect to keep more money at home, the US dollar will appreciate
(Description)
The following text is written above the graph:
Interest rates in the United States rise dramatically then the dollar will APPRECIATE.
The line, D, shifts upwards while retaining the same slope. This new line is labeled as D subscript 2. The line, D, is now labeled as D subscript 1.
The line, S, shifts upwards while retaining the same slope. This new line is labeled as S subscript 2. The line, S, is now labeled as S subscript 1.
A point, XR subscript 2, is labeled on the vertical axis, so that the value of, XR subscript 2, is larger than the value of, XR subscript 1. An up arrow next to points, XR subscript 1, and, XR subscript 2, is drawn. A dotted line parallel to the horizontal axis, extending from point, XR subscript 2, intersects with lines, D subscript 2, and, S subscript 2, at their intersection point.
The intersection point of lines, D subscript 2, and, S subscript 2, is shifted to the up with respect to the intersection point of lines, D subscript 1, and, S subscript 1.
Two right arrows between lines, D subscript 1, and, D subscript 2, are drawn.
Two left arrows between lines, S subscript 1, and, S subscript 2, are drawn.