The demand curve for Japanese yen is downward sloping because when the exchange rate (dollars per yen) falls,
A) Japanese goods become cheaper so foreigners buy more of them and need more yen to do so
B) foreigners need more dollars to buy one yen so they can now afford more Japanese goods
C) the demand curve for yen shifts to the right as foreigners buy more Japanese goods
D) foreign goods become cheaper so Japanese buy more of them and need more yen to do so
E) the supply of yen increases in response to people demanding more yen

Question

Quizplus · Accepted Answer

A downward-sloping demand curve for Japanese yen indicates that as the exchange rate (dollars per yen) decreases, Japanese goods become relatively cheaper for foreigners. This makes Japanese goods more attractive to foreign buyers, increasing the demand for yen as they need more yen to purchase these goods.

The Demand Curve for Japanese Yen Is Downward Sloping Because