If the number of Japanese yen a dollar buys falls,but neither country's price level changes,then the real exchange rate
A)depreciates which causes U.S.net exports to increase.
B)depreciates which causes U.S.net exports to decrease.
C)appreciates which causes U.S.net exports to increase.
D)appreciates,which causes U.S.net exports to decrease.

Question

Quizplus · Accepted Answer

If the number of Japanese yen a dollar buys falls, the dollar has become cheaper in terms of yen. This means that Japanese goods have become more expensive relative to US goods, making US goods more competitive in the global market. As a result, US net exports will increase.

If the Number of Japanese Yen a Dollar Buys Falls,but