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Yen Market Dynamics
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If capital flows from Japan to the U.S. increase, leading to a depreciation of the Yen, which of the following best explains why this occurs?

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Choose the Best Answer

A

Increased Yen supply makes it cheaper relative to the dollar.

B

U.S. goods become more expensive for Japanese consumers.

C

The Bank of Japan intervenes to stabilize the Yen.

D

Investors prefer to hold Yen over dollars.

Understanding the Answer

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Answer

When capital flows from Japan to the U. S. increase, it means that more investors in Japan are putting their money into American assets, like stocks or bonds. This increased demand for U. S.

Detailed Explanation

When more people want to buy U.S. Other options are incorrect because This suggests that Japanese people stop buying U.S; This implies the Bank of Japan is trying to keep the Yen strong.

Key Concepts

Capital flows
Exchange rate dynamics
International trade
Topic

Yen Market Dynamics

Difficulty

medium level question

Cognitive Level

understand

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