Figure 36-6

-In Figure 36-6, which of the following will cause a movement from equilibrium at point D to equilibrium at point B?
A)An appreciation of the dollar
B)A depreciation of the dollar
C)A depreciation of the Japanese yen
D)An increase in the U.S.price level

Question

Figure 36-6
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-In Figure 36-6, which of the following will cause a movement from equilibrium at point D to equilibrium at point B?
A)An appreciation of the dollar 
B)A depreciation of the dollar 
C)A depreciation of the Japanese yen 
D)An increase in the U.S.price level

Quizplus · Accepted Answer

A depreciation of the dollar will cause a movement from equilibrium at point D to point B because it will make Japanese goods relatively more expensive for American consumers, leading to a decrease in imports and an increase in exports. This will shift the demand for yen outward, causing an increase in the exchange rate of yen per dollar, which is reflected in the movement from point D to point B. The other options listed do not directly affect the demand for yen and therefore would not cause a movement from D to B.

Figure 36-6 ​

Figure 36-6