Under a floating exchange rate system, everything remaining constant, an increase in European exports to Japan is most likely to result in:

Question

Quizplus · Accepted Answer

An increase in European exports to Japan would result in an increased demand for euro in the foreign exchange market as Japanese companies would need to buy more euros to pay for the goods. This would lead to an appreciation of the euro vis-à-vis the Japanese yen.

Under a Floating Exchange Rate System, Everything Remaining Constant, an Increase