Other Things Equal, If Exchange Rates Are Flexible, and If

Multiple Choice

Other things equal, if exchange rates are flexible, and if U.S. consumers increase their demand for Japanese goods at the same time that Japanese consumers increase their demand for U.S. goods, then we would expect the dollar to

A) appreciate relative to the yen.
B) depreciate relative to the yen.
C) remain unchanged in value relative to the yen.
D) appreciate, depreciate, or remain unchanged in value relative to the yen - impossible To determine without more information.