If Inflation in the United States Is Higher Than in Japan,what

question 131

Multiple Choice

If inflation in the United States is higher than in Japan,what will happen to the exchange rate between the U.S.dollar and the Japanese yen?

• A)The dollar and yen will both depreciate.
• B)The dollar and yen will both appreciate.
• C)The dollar will depreciate and the yen will appreciate.
• D)The dollar will appreciate and the yen will depreciate.

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Definitions:

ROI Analysis

A financial metric used to evaluate the efficiency of an investment or compare the efficiency of several different investments, calculated by dividing the net profit from the investment by the initial cost of the investment.

Net Operating Income

The income generated from normal business operations, calculated as revenues minus operating expenses and excluding income from investments and taxes.

Average Operating Assets

The average value of assets used by a company in its operational activities, calculated over a certain period of time for analysis of performance efficiency.

Residual Income

The income that remains after subtracting all required costs of capital from the operating income; a measure of net profitability.