If income in the United States rises relative to income in Japan,the yen should appreciate against the dollar,ceteris paribus.
If income in the United States rises,Americans will purchase more Japanese goods,and this will increase the demand for the yen,causing it to appreciate.

Question

Quizplus · Accepted Answer

As stated in the text, an increase in income in the United States will lead to the purchase of more Japanese goods and an increase in demand for the yen, causing it to appreciate against the dollar. Therefore, the statement is true.

If Income in the United States Rises Relative to Income