27) if u. s. interest rates fall relative to japanese interest rates and japanese inflation falls relative to u. s. inflation, then the

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Aiyana Castro

29 May, 19:51

27) if u. s. interest rates fall relative to japanese interest rates and japanese inflation falls relative to u. s. inflation, then the

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Charity Butler · Answer 1

The US dollar savings will flow into Japan and put appreciation pressure on the Japanese Yen, resulting in a number of policy choices for Japan: 1, the Japanese central bank will interface the exchange rate between US dollar and Japanese Yen by buying and hoarding US dollars; 2, the Japanese interest rate will also fall to counter the pressure of currency appreciation; 3, the Japanese central bank could increase monetary supply to deliberately increase inflation pressure.