In the foreign exchange market, a decrease in the world demand for Japanese exports
A) shifts the demand curve for yen leftward, which causes the yen to depreciate.
B) shifts the demand curve for yen leftward, which causes the yen to appreciate.
C) shifts the demand curve for yen rightward, which causes the yen to depreciate.
D) shifts the demand curve for yen rightward, which causes the yen to appreciate.

Question

Quizplus · Accepted Answer

A decrease in world demand for Japanese exports means that fewer people/institutions are buying Japanese goods and services, so they need fewer yen to do so. This shift in demand causes the demand curve for yen to shift leftward, resulting in a depreciation of the yen.

In the Foreign Exchange Market, a Decrease in the World