Other Things Remaining Unchanged, If American Exports to Japan Increase

question 50

Multiple Choice

Other things remaining unchanged, if American exports to Japan increase and American imports from Japan decrease, then under a floating exchange rate system, we would expect::

• A)the U.S.dollar to appreciate
• B)the yen value of a U.S.dollar to be higher in Tokyo than in New York.
• C)the demand for Japanese yen to increase in the foreign exchange market.
• D)the supply curve of Japanese yen to shift inward.

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Definitions:

Interest

The cost paid by a borrower for the use of borrowed money, or the income earned by an investor on their investment.

Inventory

The total amount of goods and materials held in stock by a business, intended for sale or production purposes.

Opportunity Cost

The cost of the next best alternative foregone as the result of making a decision.

Investment Project

A project undertaken by individuals, firms, or governments involving the allocation of resources to create future benefits, such as income or profit.