Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy . The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics. Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR. Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Question

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Answer 1

Question

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.

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Answer 2

Question

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.

Answer 6

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.

Answer 7

Chapter 34, Problem 1BCQ

To determine

Concept Introduction:

Abenomics: In Japan when Mr. S became the prime minister, the country was going through negative inflation. He followed ease of monetary policy. The bank of Japan ensured that it will do everything to bring back the inflation to 2%. All the economic policies taken by Mr. S are referred to as Abenomics.

Appreciation of Currency: It is referred to as the rise in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 60, it means dollar has appreciated in comparison to INR.

Depreciation of Currency: It is referred to as the reduction in the value of currency in comparison to other currencies. Consider a situation in which value of one dollar is equal to INR 50. When it becomes equal to INR 40, it means dollar has depreciated in comparison to INR.

Answer 8

Expert Solution & Answer

Explanation of Solution

Due to quantitative easing policy followed by Mr. S, money supply increased in the market which led to low interest rate.
Low interest rate led to weakening of financial account. It means there is capital outflow. The demand for yen in exchange rate market decreased. As a result, price of yen decreased which is known as depreciation of currency.
Depreciation made the export relatively cheaper and the import relatively more expensive.

Conclusion:

Thus, ease of monetary policy in Abenomics weakens yen.