Question:
If the price of the Japanese Yen declines considerably against the Sri Lankan rupee,
(1) Sri Lankan goods are relatively cheaper for Japanese consumers.
(2) Japanese goods are relatively cheaper for Sri Lankan consumers.
(3) demand for Sri Lankan rupees would increase in Japan.
(4) it would encourage more Japanese tourists visiting Sri Lanka.
(5) it would discourage more Sri Lankan tourists visiting Japan.
Correct Answer:
(2)
Answer Explanation:
If the Japanese Yen declines against the Rupee, it means the Sri Lankan Rupee has appreciated (strengthened) relative to the Yen. Because Sri Lankans’ money is now worth more in Japan, importing goods from Japan becomes relatively cheaper for Sri Lankan consumers.
Topic: Exchange Rates Year: 2017
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