Refer to following table, in which Qd is thequantity of yen demanded, P is the dollar price of yen,Qs is the quantity of yen supplied in year 1,and Qs' is the quantity of yen supplied in year2. All quantities are in billions.
| Qd | P | Qs | Qs' |
| 20 | 130 | 40 | 60 |
| 30 | 125 | 30 | 50 |
| 40 | 120 | 20 | 40 |
| 50 | 115 | 10 | 30 |
Assume that the exchange rate is fixed against the dollar at theequilibrium exchange rate that occurs in year 1. Also suppose thatJapan and the Canada are the only two countries in the world.
In year 2, what quantity of yen would the Japanese governmenthave to buy or sell to balance its capital and financial accountwith its current account?
Buy OR Sell ____bollion Yen?
In what specific account would this purchase or sale show up inJapan’s balance of payments statement?
Foreign purchases of assets in Japan OR Japanese purchase ofassets abroad
Would this transaction increase Japan’s stock of officialinternational reserves or decrease its stock?
Decrease OR Increase
