Problem
In March 2009 the nominal exchange rate between the U.S. dollar and the Brazilian real was around 2.3 real per dollar. By March 2009 it was quite clear that the Brazilian economy was not as affected by the world financial crisis as the U.S. economy. In March 2010, the exchange rate was 1.8 real per dollar.
a) Graph the foreign exchange market in March 2009 from the U.S. perspective.
b) Using the graph, explain how expectations about the relative future performance of the U.S. and Brazil affected the demand for U.S. dollar-denominated assets.
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.