Question

f the Japanese yen appreciates against the U.S. dollar, A. U.S. consumers gain by an decrease in the dollar price of Japanese exports to the United States. B. Japanese businesses gain by a decrease in the dollar price of exports to the United States.

Answer 1

Answer: If the Japanese Yen appreciates against the United States dollar, Japanese consumers gain by a decrease in the dollar price of exports to the United States.

Explanation:

Currency appreciation is the increase in the value or worth of a currency in relation to another currency. There are several reasons for the appreciation of currencies and these include interest rates, government policy, business cycles and trade balances. The value of a currency changes based on its supply and demand in the forex market. These fluctuation in values makes firms and traders increase or decrease their financial assets and profit off them. 

An appreciation results in cheaper exports and expensive imports. If the Japanese yen appreciates, it means lesser amount would be needed to purchase a dollar thereby resulting in Japanese businesses gaining a reduction in the price of exports to the United States.

Answer 2

Answer: B. Japanese businesses gain by a decrease in the dollar price of exports to the United States.

Explanation: Currencies are traded just like any other good/commodity. If a currency A appreciates against another currency B, it means that less of A can buy B. For example if formerly, 100A could buy 1B, now 95A can buy B.

So if the Japanese yen appreciates against the U.S. dollar, Japanese businesses gain by a decrease in the dollar price of exports to the United States and U.S. consumers lose by an increase in the dollar price of Japanese exports to the United States.