I need help answering and explaining this question Consider

I need help answering and explaining this question.

Consider the demand for the U.S. dollar and the supply of the U.S. dollar, and that the exchange rate is measured in terms of Yen per dollar. If the demand for the U.S. dollar decreases, all of the following will be true EXCEPT: O a) Japanese buyers will buy more American goods. O b) the exchange rate of yen per U.S. dollar will fall. c) American buyers will buy more Japanese goods O d) the demand curve will shift to the left.

Solution

The right answer is option C.

Explanation: When the demand for the US dollar decreases, the value of dollar depreciates. So, 1 dollar can now buy less number of Japanese yen. In other words, the Japanese yen appreciates and it becomes cheaper for Japanese buyers to buy more American goods. Also, the exchange rate of yen per dollar falls as 1 dollar can now buy less yen.

American buyers will demand less Japanese goods as the dollar has depreciated and Japanese goods become costlier. The demand curve will shift as there is a shift to the left as the demand for US dollar falls.