Under a system of floating exchange rates,a Japanese trade surplus against Canada would result in a (an):
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 Japanese trade surplus against Canada would increase the demand for yen as Canadian importers need to buy 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 Surplus