📚 Learning Guide
Yen Market Dynamics
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Order the following steps in the correct sequence to explain how capital flows from Japan to the U.S. affect the Yen's value relative to the dollar: A) Increased demand for U.S. goods raises their prices relative to Japanese goods B) Capital flows from Japan increase the supply of Yen in the foreign exchange market C) The increased supply of Yen leads to a depreciation of the Yen D) U.S. consumers find Japanese goods cheaper due to the Yen's depreciation

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Choose the Best Answer

A

B → C → D → A

B

B → A → C → D

C

A → D → C → B

D

C → B → A → D

Understanding the Answer

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Answer

When capital flows from Japan to the U. S. , it increases the supply of Yen in the foreign exchange market, which is step B. As more Yen are available, this leads to a depreciation of the Yen against the dollar, which is step C. With the Yen now weaker, U.

Detailed Explanation

When money flows from Japan to the U.S., it increases the number of Yen available. Other options are incorrect because This option suggests that the supply of Yen affects prices before demand changes; This choice puts the cause of Yen depreciation before the demand increase.

Key Concepts

Yen Market Dynamics
Capital Flows
Exchange Rates
Topic

Yen Market Dynamics

Difficulty

medium level question

Cognitive Level

understand

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