Assume that Japan and the United States are engaged in a system of flexible exchange rates. Refer to the graph above. One U.S. dollar will purchase how many Japanese yen?

Question

Assume that Japan and the United States are engaged in a system of flexible exchange rates.  Refer to the graph above. One U.S. dollar will purchase how many Japanese yen?

Quizplus · Accepted Answer

Looking at the graph, the intersection of the supply and demand curves occurs at a point where one U.S. dollar buys 125 Japanese yen. Therefore, the correct answer is (C).

Assume That Japan and the United States Are Engaged in a System