Suppose that signs of an improvement in the Japanese economy lead intermational

Question

Suppose that signs of an improvement in the Japanese economy lead intermational investors to resume lending to the Japanese government and businesses, Policymakers, however, are worried about how this ll nfiuence the yen. This event would cause adecrease inthe demand for he yen, and the yen would deprecate. O B. an increase in the demand for the yen, and the yen would appreciate. O C. an increase in the supply of the yen, and the yen would appreciabe O D. a decrease in the supply of the yen, and the yen would depreciate the central bank, the Bank of Japan, wants to keep the value of the yen unchanged, then it shoud A. peg yen's value togold at he orignal exchange rate O B. buy more dollars because it is unsure about the future of the Japanese economy OC. buy freign arrencies rexcharge for he yen, thereby ncreasng its sapply and vak" of the yen wil fui toits ongrial level. O D. buy more yen, thereby decreasing its supply and the value of the yen wll ise to its oniginal evel

Explanation / Answer

Part A

Answer- B- An increase in the demand for the yen, and the yen would appreciate.

We know that the currency appreciation means that the increase in value of currency. Here is the situation is that there is sign of an improvement in the Japanese economy. That means the investors are more interested to invest in Yen. It would leads increase in the value of yen.

Part B

Answer-C- Buy foriegn currencies in exchange for the Yen,thereby increasing its supply and value of the yen fall to its original level.

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