When Canadians increase their demand for Japanese goods,
A)the demand for dollars will rise, and the demand for yen will rise.
B)the demand for dollars will fall, and the demand for yen will rise.
C)the supply of dollars will rise, and the demand for yen will rise.
D)the supply of dollars will fall, and the demand for yen will fall.

Question

Quizplus · Accepted Answer

When Canadians increase their demand for Japanese goods, they need more yen to purchase these goods. This leads to an increase in the supply of Canadian dollars in the foreign exchange market (as Canadians exchange their dollars for yen) and an increase in the demand for yen.

When Canadians Increase Their Demand for Japanese Goods