Suppose That the Japanese Yen Appreciated Relative to the Dollar

question 24

Multiple Choice

Suppose that the Japanese yen appreciated relative to the dollar. This would mean that

• A) official intervention should be expected to return the exchange rate to its pegged position.
• B) each dollar could now buy more yen than before.
• C) each dollar could now buy fewer yen than before.
• D) an immediate adjustment back to the original exchange rate should be expected as a result of third currency arbitrage.
• E) none of the above.

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