Ceteris paribus,with a fixed exchange rate,if Americans decide to buy more Japanese-made television sets,this causes a market ________ of Japanese currency and creates a balance-of-payments ________ for the United States.

Question

Quizplus · Accepted Answer

If Americans decide to buy more Japanese-made television sets, they would need to exchange their US dollars for Japanese yen, which increases the demand for yen, causing a shortage of Japanese currency. In turn, this would create a balance-of-payments deficit for the United States, as they are importing more goods than they are exporting.

Ceteris Paribus,with a Fixed Exchange Rate,if Americans Decide to Buy