Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The Yen appreciates, making Japanese goods more expensive for U.S. consumers
B
The Yen depreciates, making U.S. goods cheaper for Japanese consumers
C
The Yen remains stable, having no effect on trade
D
The Yen appreciates, making U.S. goods cheaper for Japanese consumers
Understanding the Answer
Let's break down why this is correct
Answer
When capital flows from the U. S. to Japan, it means that investors are buying Japanese assets, like stocks or bonds, using their dollars. To do this, they need to exchange their dollars for yen, which increases the demand for yen. As demand for yen goes up, its value compared to the dollar tends to rise, making the yen stronger.
Detailed Explanation
When money moves from the U.S. Other options are incorrect because Some might think that moving money makes the Yen weaker; It's a common mistake to think nothing changes.
Key Concepts
Exchange Rate Dynamics
Capital Flow Impact
International Trade
Topic
Yen Market Dynamics
Difficulty
easy level question
Cognitive Level
understand
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