Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Japanese consumers will buy more foreign goods due to lower import prices, leading to an increase in net exports.
B
Japanese exports will become more expensive for foreign buyers, potentially decreasing demand and thus lowering net exports.
C
The appreciation will have no effect on the balance of payments as currency values do not influence trade dynamics.
D
Investors will rapidly shift their investments from Japan to other countries due to increased domestic production costs.
Understanding the Answer
Let's break down why this is correct
Answer
When the Japanese Yen appreciates, it means that the value of the Yen increases compared to other currencies. This can make Japanese goods more expensive for people in other countries, which might lead to fewer exports. For example, if a car made in Japan costs 30,000 Yen, and the Yen appreciates, that same car might cost more in dollars for an American buyer, making them less likely to purchase it. As a result, Japanese companies could see a decrease in sales overseas, which can hurt their profits and possibly lead to job losses. Overall, while a strong Yen might make imports cheaper for Japanese consumers, it can negatively impact the economy by reducing export competitiveness.
Detailed Explanation
When the Yen gets stronger, Japanese products cost more for people in other countries. Other options are incorrect because This answer suggests that cheaper imports will help Japan sell more abroad; This option claims currency values don't matter for trade.
Key Concepts
Currency Appreciation
Net Exports
Balance of Payments
Topic
Impact of Currency Appreciation
Difficulty
hard level question
Cognitive Level
understand
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