Suppose the Exchange Rate Is Initially Set at 120 Yen

question 28

Multiple Choice

Suppose the exchange rate is initially set at 120 yen per dollar and increases to 140 yen per dollar.This would be expected to cause the price of Japanese goods in the U.S.economy to

• A)decrease.
• B)change in a manner that cannot be determined without additional information.
• C)remain the same since domestic demand remains the same.
• D)increase.

---

Definitions:

Threat of Entry

The risk existing businesses face when new competitors are able to enter the market or industry.

Existing Competitors

Companies that are currently operating in the same market and competing for the same customers.

Industry

A classification that refers to groups of companies that are related based on their primary business activities.

Bargaining Power

The relative ability of parties in a negotiation to exert influence over each other, often determining the terms and conditions of agreements.