Other Things Equal, Under a Floating Exchange Rate System, an Increase

question 129

Multiple Choice

Other things equal, under a floating exchange rate system, an increase in U.S.imports of Japanese goods will cause a demand for Japanese yen to

• A) increase, inducing a depreciation in the yen.
• B) decrease, inducing a depreciation in the yen.
• C) increase, inducing an appreciation in the yen.
• D) decrease, inducing an appreciation in the yen.

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Definitions:

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.