An increase in Japanese citizens' purchases of holidays in the UK would
A) Cause the pound to appreciate, but the total value of UK net exports stays the same.
B) Cause the pound to depreciate, but the total value of UK net exports stays the same.
C) Cause the total value of UK net exports to increase, but the foreign exchange value of the pound to appreciate stays the same.
D) Cause the total value of UK net exports to decrease, but the foreign exchange value of the pound to appreciate stays the same.

Question

Quizplus · Accepted Answer

An increase in Japanese citizens' purchases of holidays in the UK would increase demand for the pound as they exchange yen for pounds, causing the pound to appreciate. However, this would not necessarily change the total value of UK net exports, as it depends on other factors like imports and other exports.

An Increase in Japanese Citizens' Purchases of Holidays in the UK