If the Exchange Rate Between the Yen and the Dollar

question 194

Multiple Choice

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

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

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Definitions:

Export Subsidy

A government policy to encourage export of goods and services through direct payments, tax relief, or other financial incentives.

Net Welfare

The overall well-being of individuals or society, accounting for all benefits and costs, including those that are not traded in markets.

Economic Progress

The overall growth and improvement in an economy’s productivity, standards of living, and welfare over time.

Ad Valorem Tariffs

Tariffs based on a percentage of the value of the imported goods, used as a trade policy tool.