If a dollar will currently purchase 120 Japanese yen but it is expected that one year from now a dollar will purchase 130 yen:
A) the demand for dollars now will increase.
B) the demand for dollars now will decrease.
C) the dollar is expected to depreciate.
D) the yen is expected to appreciate.

Question

Quizplus · Accepted Answer

The expectation that a dollar will purchase more yen in the future indicates that the value of the dollar relative to the yen is expected to increase, making dollars more desirable now in anticipation of their increased purchasing power.

If a Dollar Will Currently Purchase 120 Japanese Yen but It