The principal danger to Japan in 2001 when the yen was appreciating was that this would

Question

Quizplus · Accepted Answer

When a country's currency appreciates, it makes its exports more expensive and imports cheaper. This leads to a decrease in aggregate demand as consumers tend to spend less on expensive imports and the export sector experiences a decline in demand, leading to a recession. In Japan's case, as the yen was appreciating in 2001, the principal danger was that it would decrease aggregate demand further and worsen the already ongoing recession.

The Principal Danger to Japan in 2001 When the Yen