Which of the following would cause the U. S. demand curve for Japanese yen to shift to the right?

A. An increase in the U. S. inflation rate compared to the rate in Japan

B. A higher real rate of interest on investments in Japan than on investments in the United States

C. The popularity of products produced in Japan increases in the United States

D. All of the above

E. None of the above

Question

Rayne Benton

Business

14 April, 15:58

Which of the following would cause the U. S. demand curve for Japanese yen to shift to the right?

A. An increase in the U. S. inflation rate compared to the rate in Japan

B. A higher real rate of interest on investments in Japan than on investments in the United States

C. The popularity of products produced in Japan increases in the United States

D. All of the above

E. None of the above

+2

Answers (1)

Know the Answer?

Baldwin · Answer 1

The correct answer is option D.

Explanation:

An increase in the demand for Japanese yen will cause the demand curve for yen to shift to the right, indicating an increase in the demand for yen in the US market.

An increase in the inflation rate in US as compared to japan will cause the price of the products in US to increase relatively. The consumers will prefer to purchase cheaper substitutes from Japan. They will need Japanese yen to pay for imports. This will cause the demand for yen to increase.

A higher real interest rate in Japan will attract capital inflows from the US, this will also cause the demand for yen and supply of US dollars to increase.

If the popularity of japanese products increases in the US, the consumers will import more of them. As a result, they will need more yen to pay for imports. The demand for yen will increase.