Problem
1. The United States presently has a current account deficit with Japan. What would happen to the dollar/yen spot exchange rate and the current account deficit if there were a decrease in Japanese investment in the United States? Incorporate the foreign exchange market into your answer.
2. Suppose that you observe the following exchange rates: $2/£; $0.0075/¥; and £0.005/¥. Is there cross-rate equality? If yes, why? If not, what would you expect to happen?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.