If a large number of Japanese investors decide to invest in U.S. stocks and bonds, what is the most likely immediate effect on the value of the Yen relative to the dollar?

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

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

The Yen will remain unchanged, as exchange rates are stable.

The Yen will fluctuate unpredictably, with no clear trend.

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Answer

When a large number of Japanese investors decide to invest in U. S. stocks and bonds, they need to convert their Yen into U. S. dollars to make those purchases.

Detailed Explanation

When Japanese investors buy U.S. Other options are incorrect because Some might think that buying U.S; It's a common belief that exchange rates stay the same.

Key Concepts

Capital flows and exchange rates

Impact on international trade

Currency depreciation

Topic

Yen Market Dynamics

Difficulty

easy level question

Cognitive Level

understand

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