If the Japanese yen appreciates against other currencies in the exchange markets,this will:
A) Have no effect on the Japanese balance of trade
B) Tend to improve the Japanese balance of trade
C) Tend to worsen the Japanese balance of trade
D) None of the above

Question

Quizplus · Accepted Answer

An appreciation in the Japanese yen makes Japanese exports more expensive and less competitive in international markets, while also making imports cheaper for Japanese consumers. This tends to worsen the Japanese balance of trade, as it leads to a decrease in exports and an increase in imports, causing a higher trade deficit.

If the Japanese Yen Appreciates Against Other Currencies in the Exchange