Assume a System of Floating Exchange Rates

question 144

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,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