When the real exchange rate of Japan's yen appreciates,
A) the yen's nominal exchange rate must remain constant.
B) the yen's nominal exchange rate must also appreciate.
C) the yen's nominal exchange rate must depreciate.
D) Japanese goods are less competitive on international markets.

Question

Quizplus · Accepted Answer

When the real exchange rate of Japan's yen appreciates, it means that Japanese goods become more expensive relative to foreign goods. This makes Japanese goods less competitive on international markets, as it would cost more for foreigners to buy Japanese products.

When the Real Exchange Rate of Japan's Yen Appreciates