If income in the United States rises relative to income in Japan,the yen should appreciate against the dollar,ceteris paribus.

Question

Quizplus · Accepted Answer

When income in the United States rises relative to income in Japan, demand for Japanese goods from the US will increase, leading to an increase in demand for the yen to make those purchases. This will cause an appreciation in the value of the yen against the dollar. However, other factors can also affect exchange rates, so it is important to keep in mind the ceteris paribus assumption.

If Income in the United States Rises Relative to Income