With a system of floating, or flexible, exchange rates, inflation in the United States would decrease the Japanese demand for dollars.

Name: With a system of floating, or flexible, exchange rates, inflation in the United States would decrease the Japanese demand for dollars.
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Question

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Inflation in the United States would make U.S. goods more expensive relative to Japanese goods, decreasing the Japanese demand for dollars needed to buy those more expensive U.S. goods.

With a System of Floating, or Flexible, Exchange Rates, Inflation