If the Japanese government enters the foreign exchange market and sells yen to maintain a specific exchange rate with the dollar, the dollar will ________ and the yen will ________.

Question

Quizplus · Accepted Answer

When the Japanese government sells yen in the foreign exchange market, it increases the supply of yen, leading to a depreciation of the yen. At the same time, it increases the demand for dollars, leading to an appreciation of the dollar.

If the Japanese Government Enters the Foreign Exchange Market and Sells