A Change in the Dollar Price of Yen from $1

question 51

Multiple Choice

A change in the dollar price of yen from $1 = 100 yen to $1 = 50 yen will:

• A) make U.S.goods more expensive to the Japanese.
• B) make Japanese goods less expensive to Americans.
• C) increase U.S.exports and depress Japanese exports.
• D) increase Japanese exports and depress U.S.exports.

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Definitions:

Subsidy

A financial contribution granted by a government or organization to support a business, industry, or activity, making it more affordable or viable.

Market Equilibrium

A state in the market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price for a good or service.

Socially Optimal Level

A state in which resources are allocated in the most efficient way possible, maximizing societal welfare or benefit.

Positive Externalities

Benefits experienced by third-parties or the society at large due to an economic activity, not directly involved in the transaction, such as education or vaccination.