If the Japanese buy more Australian goods,they _____ more yen and _____ more dollars in the foreign exchange market.

Question

Quizplus · Accepted Answer

If the Japanese buy more Australian goods, they are supplying more yen in exchange for Australian dollars in the foreign exchange market (supply). This increased supply of yen would result in a decrease in the value of yen relative to the Australian dollar, making it cheaper for the Japanese to buy Australian goods. On the other hand, the increased demand for Australian dollars would drive up their value in the foreign exchange market (demand).

If the Japanese Buy More Australian Goods,they _____ More Yen