If the exchange rate moves from £1 = 100 yen to £1 = 150 yen, ceteris paribus, what happens to the price of UK goods in Japan?
Correct answer C. It will increase
Explanation
Japanese buyers now need 150 yen instead of 100 yen for each pound's worth of British goods, so the yen price of UK exports rises by 50%.
Answer checked How we write and check questions
Discussion