If Japan increases its investments in U.S. assets, which of the following best describes the expected impact on the Yen's value relative to the Dollar and the implications for trade?

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The Yen's value will decrease, making Japanese goods cheaper for U.S. consumers and U.S. exports more expensive for Japan.

The Yen's value will increase, making Japanese goods more expensive for U.S. consumers and U.S. exports cheaper for Japan.

The Yen's value will remain stable, with no impact on trade dynamics.

The Yen's value will decrease, leading to a balanced effect on trade between Japan and the U.S.

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Answer

If Japan increases its investments in U. S. assets, it means that Japanese investors are buying more American stocks, bonds, or real estate. To make these purchases, they need to exchange their Yen for U. S.

Detailed Explanation

When Japan invests more in U.S. Other options are incorrect because This answer suggests that the yen will become stronger; This option claims nothing will change.

Key Concepts

Yen-Dollar Exchange Rate Dynamics

Capital Flows and Their Effects

International Trade Implications

Topic

Yen Market Dynamics

Difficulty

easy level question

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