Assume that Japan places a strict quota on goods imported from the United States and the United States places a strict quota on goods imported from Japan. This event should immediately cause the U.S. demand for Japanese yen to ____, and the supply of Japanese yen to be exchanged for U.S. dollars to ____.

Question

Assume that Japan places a strict quota on goods imported from the United States and the United States places a strict quota on goods imported from Japan. This event should immediately cause the U.S. demand for Japanese yen to ____, and the supply of Japanese yen to be exchanged for U.S. dollars to ____.​

Quizplus · Accepted Answer

The U.S. demand for Japanese yen would decline because fewer goods are being imported from Japan, reducing the need for yen. Similarly, the supply of yen to be exchanged for U.S. dollars would also decline because Japan would be exporting fewer goods to the U.S., resulting in less need to exchange yen for dollars.

Assume That Japan Places a Strict Quota on Goods Imported