Suppose a U.S.-made machine costs $500 and the exchange rate was 100 yen = $1 yesterday. Today the exchange rate is 90 yen = $1. You know then that the
A) machine would now cost more dollars
B) machine would now cost the Japanese firm less yen
C) machine would now cost less dollars
D) machine would now cost the Japanese firm more yen
E) yen has depreciated in value

Question

Quizplus · Accepted Answer

The exchange rate is now 90 yen = $1, which means that the yen has depreciated in value. This means that the machine will now cost the Japanese firm less yen.