27) if u. s. interest rates fall relative to japanese interest rates and japanese inflation falls relative to u. s. inflation, then the

Question

Business

Mariela Anderson

6 November, 10:33

27) if u. s. interest rates fall relative to japanese interest rates and japanese inflation falls relative to u. s. inflation, then the

+4

Answers (1)

Know the Answer?

Kellen Clay · Answer 1

The US dollar savings will flow into Japan and put appreciation pressure on the Japanese Yen, resulting in a number of policy choices for Japan: 1, the Japanese central bank will interface the exchange rate between US dollar and Japanese Yen by buying and hoarding US dollars; 2, the Japanese interest rate will also fall to counter the pressure of currency appreciation; 3, the Japanese central bank could increase monetary supply to deliberately increase inflation pressure.