The dollar will appreciate relative to the yen if, ceteris paribus:
A)Australian interest rates decrease relative to interest rates in other countries.
B)income in Japan falls.
C)speculators think the value of the dollar relative to the yen will rise.
D)there is a recession in Japan.

Question

Quizplus · Accepted Answer

Speculators thinking the value of the dollar relative to the yen will rise would increase the demand for the dollar, causing it to appreciate relative to the yen. The other choices are not related to the exchange rate between the dollar and yen. Decreasing Australian interest rates would likely cause the Australian dollar to depreciate relative to the yen, income in Japan falling or a recession in Japan might lead to a weakening of yen which in turn would cause appreciation of the dollar.

The Dollar Will Appreciate Relative to the Yen If, Ceteris