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Yen Market Dynamics
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If capital flows from Japan to the U.S., what is the expected impact on the Yen's value and U.S. exports to Japan?

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Choose the Best Answer

A

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

B

The Yen appreciates, making U.S. exports more expensive for Japan.

C

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

D

The Yen appreciates, making Japanese goods more affordable for U.S. consumers.

Understanding the Answer

Let's break down why this is correct

Answer

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

Detailed Explanation

When money moves from Japan to the U.S., the demand for Yen decreases. Other options are incorrect because This answer suggests that U.S; This option claims the Yen gets stronger, which is incorrect.

Key Concepts

Exchange Rate Dynamics
Capital Flows
International Trade Effects
Topic

Yen Market Dynamics

Difficulty

medium level question

Cognitive Level

understand

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