1) Explain how each of the following scenarios, holding other things equal, will affect the value of the cherrio. Scenarios: a. U.S. inflation has suddenly increased substantially, while inflation in...

1) Explain how each of the following scenarios, holding other things equal, will affect the value of the
cherrio.
Scenarios:
a. U.S. inflation has suddenly increased substantially, while inflation in Cherryland remains low.
b. Real interest rates have increased substantially in the U.S.; while real interest rates in Cherryland
remain low.
c. The U.S. income level increased substantially, while in Cherryland income level has remained
unchanged.
d. The U.S. is expected to impose a small tariff on goods imported from Cherryland.
2) Aggregate all of these impacts to develop an overall forecast of the cherrio’s movement against the
U.S. dollar