-Refer to the above figure. Suppose E is the original equilibrium. An increase in the U.S. demand for Japanese-made goods will lead to
A) a depreciation of the yen and an increase in the quantity of yen sold per week.
B) a depreciation of the yen and a decrease in the quantity of yen sold per week.
C) an appreciation of the yen and an increase in the quantity of yen sold per week.
D) an appreciation of the yen and a decrease in the quantity of yen sold per week.

Question

-Refer to the above figure. Suppose E is the original equilibrium. An increase in the U.S. demand for Japanese-made goods will lead to
A) a depreciation of the yen and an increase in the quantity of yen sold per week. 
B) a depreciation of the yen and a decrease in the quantity of yen sold per week. 
C) an appreciation of the yen and an increase in the quantity of yen sold per week. 
D) an appreciation of the yen and a decrease in the quantity of yen sold per week.

Quizplus · Accepted Answer

An increase in the U.S. demand for Japanese-made goods will lead to an increase in the quantity of yen demanded, which will lead to a depreciation of the yen. The depreciation of the yen will make Japanese-made goods cheaper for U.S. consumers, which will lead to an increase in the quantity of yen sold per week.

-Refer to the Above Figure