Final answer:
The three economic events would influence the exchange rate of the US dollar: purchasing a Japanese sports car by US consumers could depreciate the dollar, higher interest rates offered by US banks could appreciate the dollar, and US businesses investing abroad could also lead to depreciation of the dollar.
Step-by-step explanation:
Effects of Different Economic Events on US Dollar Exchange Rate:
Exchange rate movements are influenced by different economic events and they affect various groups such as exporters, tourists, and international investors. Let's examine the impact of the three different scenarios provided:
- Japanese sports car purchases by US consumers: If a new sports car is produced in Japan that many US consumers want to buy, it would increase the demand for Japanese yen and decrease the demand for US dollars, as US consumers would exchange their dollars for yen to make the purchase. This could lead to a depreciation of the US dollar relative to Japanese yen.
- High interest rates by US banks: When US banks offer higher interest rates for deposits, attracting international capital, there would be a higher demand for US dollars as investors seek to take advantage of the higher returns. This increased demand would likely cause the US dollar to appreciate relative to other currencies.
- US businesses investing abroad: If many US businesses decide to invest in businesses in other nations, they would need to exchange their US dollars for foreign currencies to make these investments. This increase in the supply of US dollars on the foreign exchange market could cause the US dollar to depreciate against those currencies.
Each of these events would affect the exchange rate of the US dollar: consumer purchases of foreign goods can lead to depreciation, higher domestic interest rates to appreciation, and increased foreign investment by domestic businesses to depreciation.