Sia
Question
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Posted 8 months ago
Which of the following describes who benefits from a depreciation of the Japanese yen in international currency markets?
Choose 1 answer:
(A) Currency traders who hold large quantities of yen
(B) South African residents visiting Japan
(C) Japanese buyers of Bolivian government issued bonds
(D) A Japanese citizen living off a Japanese pension while retired in Belize
(E) Japanese citizens wanting to buy German cars
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Answer from Sia
Posted 8 months ago
Solution by Steps
step 1
To understand who benefits from a depreciation of the Japanese yen, we need to consider the impact of a weaker yen on different economic actors
step 2
A weaker yen means that the currency has less value compared to other currencies, making imported goods more expensive and exported goods cheaper for foreign buyers
step 3
Evaluate each answer choice in the context of a depreciated yen:
A. Currency traders holding yen would lose value, so they do not benefit.
B. South African residents visiting Japan would find their currency stronger relative to the yen, making their visit cheaper.
C. Japanese buyers of Bolivian bonds would not benefit directly from a weaker yen in this context.
D. A Japanese citizen living abroad would find their pension worth less in the local currency, so they do not benefit.
E. Japanese citizens would find German cars more expensive due to the weaker yen, so they do not benefit
∻Answer∻
B
Key Concept
Currency Depreciation Benefits Foreign Visitors
Explanation
When a currency depreciates, foreign visitors benefit as their purchasing power increases in the country with the weaker currency.
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