Suppose the exchange rate for Japanese Yen to US dollar changes from
1= 108 Yen. This will be good news for ? US consumers buying Japanese goods and services. ? Japanese consumers buying American goods and services. ? Japanese producers exporting to the US. ? US producers importing from Japan.
The Correct Answer and Explanation is:
When the exchange rate for Japanese Yen to US dollar changes from 1 = 108 Yen, it means that the Japanese Yen has depreciated in value relative to the US dollar. Now, let’s break down the implications for each of the groups involved:
- US Consumers Buying Japanese Goods and Services: If the Yen is weaker, it will cost US consumers fewer dollars to buy Japanese goods and services. This is because the exchange rate has become more favorable for them. So, US consumers will benefit from this change, as it makes Japanese products cheaper.
- Japanese Consumers Buying American Goods and Services: For Japanese consumers, the depreciation of the Yen means that American goods and services become more expensive. Since the Yen is weaker relative to the US dollar, Japanese consumers will need more Yen to purchase the same amount of American goods. This is bad news for them because their purchasing power in the US market has decreased.
- Japanese Producers Exporting to the US: Japanese producers will benefit from a weaker Yen because their goods and services become cheaper for US consumers. This can make Japanese exports more competitive in the US market, potentially increasing the volume of exports.
- US Producers Importing from Japan: For US producers importing goods from Japan, a weaker Yen is not favorable. US businesses will need to pay more in US dollars for the same amount of goods. This increase in costs could hurt their profit margins and make their products more expensive, ultimately affecting their bottom line.
Conclusion:
The correct answer is: Japanese producers exporting to the US. A weaker Yen makes Japanese products cheaper for US consumers, boosting demand for Japanese exports.
