Assume a System of Floating Exchange Rates

question 100

Multiple Choice

Assume a system of floating exchange rates.Due to a high savings rate, suppose the level of savings in Japan is in excess of domestic investment needs.If Japanese residents invest abroad, then the yen's exchange value will ____ , and the Japanese trade balance will move toward ____.

• A) appreciate, deficit
• B) appreciate, surplus
• C) depreciate, deficit
• D) depreciate, surplus

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Definitions:

Short Time Horizons

The focus on immediate or near-term outcomes and goals, often at the expense of long-term planning and sustainability.

Problems

Problems are obstacles, discrepancies, or uncertainties that necessitate solutions or decisions, often requiring analysis, creativity, and strategic thinking to resolve.

Decision Making Process

A step-by-step approach to choosing between alternatives to achieve a goal or solve a problem, involving stages such as problem identification, generating options, and selecting the best solution.

Generating Alternative Solutions

The process of brainstorming or devising multiple options or approaches to solve a problem or address a situation.