How does an increase in capital flows from Japan to the U.S. affect the Yen's value and international trade?

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The Yen depreciates, making Japanese goods cheaper for U.S. consumers.

The Yen appreciates, making U.S. goods cheaper for Japan.

The Yen remains stable, with no effect on international trade.

The Yen depreciates, making U.S. goods cheaper for Japan.

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Answer

When capital flows increase from Japan to the U. S. , it means that more Japanese investors are buying American assets, like stocks or real estate. This demand for U. S.

Detailed Explanation

When more money flows from Japan to the U.S., it means people are buying more U.S. Other options are incorrect because Some might think that more money going to the U.S; It's a common mistake to think that capital flows have no effect.

Key Concepts

Exchange Rate Dynamics

Capital Flows

International Trade Effects

Topic

Yen Market Dynamics

Difficulty

medium level question

Cognitive Level

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