If the Exchange Rate Between the Yen and the Dollar

question 122

Multiple Choice

If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1, then:

• A) the dollar has depreciated in value.
• B) U.S.-made goods will become less expensive to Japanese citizens.
• C) the dollar has appreciated in value.
• D) Japanese-made goods will become more expensive to U.S. citizens.
• E) there will be an increase in the demand for dollars in the foreign exchange market.

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Definitions:

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income, holding everything else constant.

College Income

The earnings received from work or investments by someone who is attending college or the revenue generated by colleges through tuition, donations, and grants.

Cross-Price Elasticity

A measure indicating how the demand for one product changes in response to a price change of another product.

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