Relative to the yen, from 2007-2012 the U.S. dollar
A) appreciated due to an increase in the interest rate differential and expectations of a higher future exchange rate.
B) appreciated due to a decrease in the interest rate differential and expectations of a lower future exchange rate.
C) depreciated due to an increase in the interest rate differential and expectations of a higher future exchange rate.
D) depreciated due to a decrease in the interest rate differential and expectations of a lower future exchange rate.

Question

Quizplus · Accepted Answer

The U.S. dollar depreciated relative to the yen from 2007-2012 due to a decrease in the interest rate differential, as the U.S. had lower interest rates compared to Japan, and expectations of a lower future exchange rate.

Relative to the Yen, from 2007-2012 the U