Suppose the U.S. dollar substantially depreciates against the Japanese yen. The change in exchange rate

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A substantial depreciation in the U.S. dollar against the Japanese yen can have significant economic consequences for both U.S. and Japanese firms. U.S. firms that export to Japan will find their goods more expensive for Japanese buyers, which may result in decreased demand and lower profits. Japanese firms that export to the U.S. will find their goods more affordable for U.S. buyers, potentially resulting in increased demand and higher profits. This can also impact the competitiveness of firms in both countries and may lead to shifts in market share. Additionally, the change in exchange rates can affect investment flows and the relative values of assets held by investors in both countries.