A decline in the value of the dollar relative to the Japanese yen makes U.S. agricultural exports to Japan:

A decline in the value of the dollar relative to the Japanese yen makes U.S. agricultural exports to Japan:

• A. Less expensive to Japanese buyers
• B. More expensive to Japanese buyers
• C. No effect on price
• D. Unclear impact on buyers

Answer: (B)

When exchange rates change, the local-currency price of goods priced in another currency changes as well. If the dollar declines in value relative to the yen, it takes more yen to buy the same one dollar. So a U.S. export priced in dollars costs more in yen for Japanese buyers. For example, a $100 item costs more yen if 1 USD now equals more yen than before. This makes U.S. agricultural exports more expensive for Japanese buyers. The other options don’t fit because a weaker dollar does not reduce the yen price, and currency shifts do affect price rather than having no effect or being unclear.

When exchange rates change, the local-currency price of goods priced in another currency changes as well. If the dollar declines in value relative to the yen, it takes more yen to buy the same one dollar. So a U.S. export priced in dollars costs more in yen for Japanese buyers. For example, a $100 item costs more yen if 1 USD now equals more yen than before. This makes U.S. agricultural exports more expensive for Japanese buyers. The other options don’t fit because a weaker dollar does not reduce the yen price, and currency shifts do affect price rather than having no effect or being unclear.