Under a Flexible Exchange Rate System,if the Rate of Inflation

question 64

Multiple Choice

Under a flexible exchange rate system,if the rate of inflation in the United States exceeds that in Japan

• A) the Japanese yen will appreciate relative to the dollar.
• B) the dollar will be devalued.
• C) gold will flow from Japan to the United States.
• D) the U.S. demand for yen will shift to the left.
• E) the exchange rate will remain the same, but exports and imports will fall.