Multiple Choice
The risks of doing business are most likely to be the highest in a country that:
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7. Externalities
Externalities: Social Benefits and Social Costs
Multiple Choice
An appreciating yen makes Japanese products:
A
more expensive for foreign buyers
B
more expensive for Japanese consumers
C
have no change in price for foreign buyers
D
cheaper for foreign buyers
Verified step by step guidance1
Understand the concept of currency appreciation: When the yen appreciates, it means the yen becomes stronger relative to other currencies, so one yen can buy more foreign currency than before.
Analyze the effect on prices for foreign buyers: Since the yen is stronger, foreign buyers need to spend less of their own currency to buy the same amount of yen, making Japanese products cheaper for them.
Consider the effect on prices for Japanese consumers: The price of Japanese products in yen remains the same for domestic consumers, so there is no direct change in price for Japanese consumers.
Evaluate the options given: Since the yen appreciates, Japanese products become cheaper for foreign buyers, not more expensive, and prices for Japanese consumers do not increase due to currency changes.
Conclude that the correct interpretation is that an appreciating yen makes Japanese products cheaper for foreign buyers.
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