If the Equilibrium Exchange Rate Between U

question 46

Multiple Choice

If the equilibrium exchange rate between U.S.dollars and Japanese yen is $0.007 = 1 yen,but currently the exchange rate is $0.009 = 1 yen,then with flexible exchange rates the dollar price of a yen will __________,and the yen will __________.

• A) increase; appreciate
• B) decrease; appreciate
• C) increase; depreciate
• D) decrease; depreciate

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