Under a system of floating exchange rates, a Japanese trade surplus against Canada would result in a(n)
A) rise in the dollar price of the yen.
B) fall in the dollar price of the yen.
C) rise in the yen price of the dollar.
D) unchanged dollar/yen exchange rate.

Question

Quizplus · Accepted Answer

A trade surplus for Japan against Canada would increase demand for the yen as Canadian importers convert their dollars to yen to pay for Japanese goods, leading to a rise in the dollar price of the yen.

Under a System of Floating Exchange Rates, a Japanese Trade