Suppose that the economically largest nations collectively decided that the dollar is too strong (high in value) relative to the yen. These nations might
A) use foreign exchange reserves of yen to buy dollars.
B) use foreign exchange reserves of dollars to buy yen.
C) encourage Japan to print more yen.
D) encourage the United States to increase interest rates.

Question

Quizplus · Accepted Answer

The economically largest nations would use their foreign exchange reserves of dollars to buy yen. This would increase the demand for yen and decrease the demand for dollars, which would result in a decrease in the value of the dollar relative to the yen.

Suppose That the Economically Largest Nations Collectively Decided That the Dollar