When Canadians decrease their demand for Japanese goods,
A)the demand for Canadian dollars will rise, and the demand for yen will rise.
B)the demand for Canadian dollars will fall, and the demand for yen will rise.
C)the supply of Canadian dollars will rise, and the demand for yen will rise.
D)the supply of Canadian dollars will fall, and the demand for yen will fall.
E)the supply of Canadian dollars will fall, and the demand for yen will not change.

Question

Quizplus · Accepted Answer

When Canadians decrease their demand for Japanese goods, they are buying less from Japan, which means they need fewer yen. This reduces the demand for yen. Simultaneously, fewer Canadian dollars are being exchanged into yen, indicating a reduced supply of Canadian dollars on the foreign exchange market, as there's less need to sell Canadian dollars for yen.

When Canadians Decrease Their Demand for Japanese Goods