Question

Assume that Japan places a strict quota on goods imported from the United States and the United States places a strict quota on goods imported from Japan. This event should immediately cause the U.S. demand for Japanese yen to ____, and the supply of Japanese yen to be exchanged for U.S. dollars to

Answer 1

Answer:

The correct answer is decline; decline

Explanation:

Within the trade process, it is normal for countries to try to exercise policies in order to protect their internal markets. This situation normally occurs in developed economies, in order to encourage domestic consumption of their products but also open other markets to market them. In this example, an economic war is shown on both sides, which directly affects the currencies of each economy, because investors will choose to trade less with yen and more with dollars, since within this process of uncertainty nobody wants to lose in case that the yen's value falls in a short period of time. This seeks to protect heritage on the one hand and, on the other, to encourage the internal economy.