If Japan runs current account deficit and exchange rates are floating?
Correct answer: B. Japanese exports become less expensive for foreign buyers
- A. Japanese exports become more expensive to foreign buyers
- B. Japanese exports become less expensive for foreign buyers
- C. Japanese imports become less expensive for German buyers
- D. Japanese imports become more prestigious to German buyers
Explanation
A current-account deficit puts downward pressure on Japan's currency under floating exchange rates. Depreciation makes Japanese exports cheaper for foreign buyers, so b is correct.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?
Given a system of floating exchange rates falling income in the United States would trigger a (an) ?
Which example of market expectations causes the dollar to appreciate against the yen- expectations that the U.S economy will have ?
Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that ?
When the price of foreign currency (the exchange rate) is above the equilibrium level ?
The high foreign exchange value of the U.S dollar in the early 1980s can best be explained by ?