Assume that Japan places a strict quota on goods imported from the U.S. and the U.S. places a strict quota on goods imported from Japan. This event should immediately cause the U.S. demand for Japanese yen to ____, and the supply of Japanese yen to be exchanged for U.S. dollars to ____.

Question

Quizplus · Accepted Answer

The strict quotas on imports will cause a decline in trade between the U.S. and Japan. This will result in a decreased demand for Japanese yen in the U.S. and a decreased supply of Japanese yen being exchanged for U.S. dollars. Therefore, the U.S. demand for Japanese yen will decline and the supply of Japanese yen being exchanged for U.S. dollars will also decline.

Assume That Japan Places a Strict Quota on Goods Imported