Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Exports decrease and imports increase, leading to a trade deficit.
B
Exports increase and imports decrease, improving the trade balance.
C
Both exports and imports remain unchanged.
D
Exports decrease and imports remain the same, affecting only domestic prices.
Understanding the Answer
Let's break down why this is correct
Answer
When the Yen appreciates, or becomes stronger compared to other currencies, it means that Japanese goods become more expensive for people in other countries. This can lead to a decrease in exports because foreign buyers might choose cheaper products from other countries instead. At the same time, a stronger Yen makes imports cheaper for Japan, so Japanese consumers and businesses may buy more foreign goods. For example, if a car made in Japan costs 1,000 Yen, but after appreciation, it costs the same in dollars as a car from another country that is cheaper, buyers might prefer the foreign car. Overall, a stronger Yen can hurt Japan's trade balance by reducing exports and increasing imports.
Detailed Explanation
When the Yen gets stronger, Japanese goods become more expensive for other countries. Other options are incorrect because Some might think that a stronger Yen helps exports; It's a common belief that currency changes don't affect trade.
Key Concepts
Currency Appreciation
Trade Balance
Balance of Payments
Topic
Impact of Currency Appreciation
Difficulty
easy level question
Cognitive Level
understand
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