Exchange rate between canadian dollars and yen

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Reference no: EM132073946

1. Suppose that in 2017 the exchange rate between Canadian dollars (C$) and yen (¥) was ¥200/C$. In 2018, the exchange rate was ¥210/C$. How would this affect Japan's BOT (ignoring any possible feedback loop), all else being equal?

Japan's BOT would increase.

Japan's BOT would decrease.

Japan's BOT would be unaffected.

Cannot be determined.

2. Suppose that the yen/pound exchange rate on 1/1/2015 was ¥120/pound. One month later, the rate was ¥115/pound. If the J-curve theory holds, which of the following situations would occur, all else being equal?

Britian's BOT would initially improve, and then gradually worsen.

Japan's BOT would initially worsen, and then gradually improve.

Britian's BOT would initially worsen, and then gradually improve.

The balance of trade for both nations would be unaffected.

Reference no: EM132073946

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