ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A Japanese citizen purchasing this machine would pay: 50, 000 yen. If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1, then: the dollar has appreciated in value.

Detailed explanation-2: -When the exchange rate between the U.S. dollar and the Japanese yen is $1 = 100 yen, this is an indication that: It would take 100 yen to purchase $1.

Detailed explanation-3: -When the Japanese yen appreciates against the US dollar, this means that the US dollar is strengthening relative to the yen. The changes in a currency’s value can have a major impact on costs and revenues of MNCs. Illiquid currencies tend to exhibit less volatile exchange rate movements than liquid currencies.

Detailed explanation-4: -If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls. 1. The change in relative prices will decrease U.S. exports and increase its imports.

Detailed explanation-5: -Increase in demand for our exports while a fall in tastes of foreign goods will lead to a trade surplus. Increase in demand for our exports by the foreign countries will increase our exports while fall in tastes for foreign goods will decrease our imports.