How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?
A)The demand for the yen will fall,and the supply of the yen will increase.
B)The demand for the yen will increase,and the supply of the yen will fall.
C)The demand for the yen will fall,and the supply of the yen will fall.
D)The demand for the yen will increase,and the supply of the yen will increase.

Question

Quizplus · Accepted Answer

Contractionary monetary policy in Japan typically involves increasing interest rates or reducing the money supply, making Japanese assets more attractive to foreign investors. This increases the demand for yen as investors exchange their currency for yen to invest in Japan, and decreases the supply of yen in the foreign exchange market as more yen are held by investors.

How Will Contractionary Monetary Policy in Japan Affect the Demand