Assume that Japan and the United States are engaged in a system of flexible exchange rates. If more people in the United States decide to purchase Japanese cars, what effect will this have on the market for yen?

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When more people in the United States decide to purchase Japanese cars, they need to convert their dollars into yen to make the purchase. This increases the demand for yen, which, under a system of flexible exchange rates, leads to an increase in the price of yen.

Assume That Japan and the United States Are Engaged in a System