When the yen gets "stronger" relative to the dollar, what happens to the Canadian trade deficit with Japan?
A)The Canadian trade deficit with Japan will rise.
B)The Canadian trade deficit with Japan will fall.
C)The Canadian trade deficit with Japan will be unchanged.
D)There is insufficient information to answer this question.

Question

Quizplus · Accepted Answer

When the yen gets stronger relative to the dollar, it becomes more expensive for Canadian importers to buy goods from Japan. This results in a decrease in import demand, which in turn reduces the trade deficit between Canada and Japan. Therefore, the Canadian trade deficit with Japan will fall.

When the Yen Gets "Stronger" Relative to the Dollar, What