Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Geopolitical stability increases demand for the yen as a safe haven currency
B
Geopolitical unrest decreases the supply of yen
C
Geopolitical factors have no impact on the yen's value
D
Increased demand for imports leads to a stronger yen
Understanding the Answer
Let's break down why this is correct
Answer
Geopolitical factors play a significant role in the supply and demand for the yen in the foreign exchange market. When there are tensions or conflicts in Asia, investors may seek safety in the yen because Japan is seen as a stable economy. For example, if there is a crisis in a neighboring country, demand for the yen might increase as people move their investments there to avoid risk. Conversely, if Japan faces political instability or economic challenges, the supply of yen might increase as investors sell off their holdings, leading to a decrease in its value. Overall, these geopolitical events can greatly shift how much people want to buy or sell the yen.
Detailed Explanation
When a country is stable, people feel safe investing there. Other options are incorrect because Some might think that unrest means less yen is available; It's a common belief that nothing affects the yen's value.
Key Concepts
supply and demand
monetary policy
geopolitical factors
Topic
Yen Market Dynamics
Difficulty
hard level question
Cognitive Level
understand
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