The decline in the value of the yen after 2012 occurred as a result of the Japanese central bank,the Bank of Japan,following an expansionary monetary policy.Investors expected that the result would be lower nominal Japanese interest rates and a higher inflation rate.In response,investors ________,causing the value of the yen to decline against the dollar.
A)sold Japanese financial assets and bought U.S.financial assets
B)sold Japanese financial assets and sold U.S.financial assets
C)bought Japanese financial assets and sold U.S.financial assets
D)bought Japanese financial assets and bought U.S.financial assets

Question

Quizplus · Accepted Answer

Investors sold Japanese financial assets, such as stocks and bonds, and bought U.S. financial assets, such as Treasury bonds and stocks, in order to take advantage of the expected lower interest rates and higher inflation rate in Japan. This increased demand for U.S. dollars and decreased demand for yen, leading to a decline in the value of the yen against the dollar.

The Decline in the Value of the Yen After 2012